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Last Updated: 08/22/01Copyright 2001 by Marketspace LLCCONFIDENTIAL

Copyright 2001 by Marketspace LLC

Chapter 1 Lecture Slides

A Framework for E-Commerce

Rayport, JaworskiIntro to e-Commerce

Exhibits and Tables

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Last Updated: 08/22/01Copyright 2001 by Marketspace LLC

A Framework for E-Commerce Todays Objective

The objective of this chapter is to provide a framework for the study andpractice of e-commerce.

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Chapter 1: A Framework for E-Commerce

l Definition and scope of e-commerce

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l Strategy-making in a rapidly changing environment

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l The framework for the field of e-commerce

l

l What do senior e-commerce managers do?l

l Key challenges for senior leadership in todays environment

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l Overview of book chapters

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l Conclusion

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l Conclusion

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Networked Economy

l Create value through the collection, organization and distributionof information

l

l Strategy formulation to make management of the enterprise andmanagement of technology convergent

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l Competition in real timel

l Low barriers to entryl

l Organize resources around the demand sidel

l Technology for managing relationships with customers andmarkets

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l Use of technology-mediated channels

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Attributes and Definition of E-Commerce

l Exchange of digitized information between parties

l

l Technology-enabled

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l Technology-mediated

l

l Intraorganizational and interorganizational activities to supportexchanges

E-commerce: Technology-mediated exchanges between

parties (individuals or organizations) as well as the electronically based intraorganizational or interorganizational

activities that facilitate such exchanges

l

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Table 11: Four Categories of E-Commerce

B2BB2B C2BC2B

B2CB2C C2CC2C

Business Consumers

Business originating from . . .

Bus

ines

s

Consu

mers

And

sellingto.

..

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Exhibit 11: Convergence of E-Commerce Categories

Publishers order paper

supplies from papercompanies

Amazon orders frompublishers

Publishers order paper

supplies from papercompanies

Amazon orders frompublishers

Consumers aggregate tobulk purchase from Amazon

Consumers aggregate tobulk purchase from Amazon

Consumers buy thousandsof Harry Potter books from

Amazon

Consumers buy thousandsof Harry Potter books fromAmazon

Business Consumers

Business originating from . . .

Bus

ines

s

Consu

mers

And

sellingto.

..

Consumers resellcopies on eBay

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Exhibit 12: Classical Framework for Strategic Management

ImplementationImplementation

Internal

(Company)Analysis

Internal(Company)Analysis

External

Analysis

External

Analysis

Controland

Monitoring

Controland

Monitoring

StrategyFormulation

StrategyFormulation

lCorporate

lBusinessUnit

lFunctional

lOperating

ObjectivesObjectives

MissionMission

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Sense-and-Respond Strategy

l Easy, actionable and easy to respond to

experiment with solutions

l Proactively solicit feedback from customers

Drawbacksl Reactive approach

appropriate for incremental competitive moves

l More appropriate for traditional offline companies

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Table 12: Three Approaches to Strategy

Source:Kathleen M. Eisenhardt and Donald Soll, Strategy As Simple Rules, Hayward Business Review (January 2001), 109.

Position Resources Simple Rules

Strategic Logic l Establish position l Leverage resources l Pursue opportunities

Strategic Steps

l Identify an attractivemarket

l Locate a defensibleposition

l

Fortify and defend

l Establish a vision

l Build resources

l Leverage across markets

l Jump into the confusion

l Keep moving

l Seize opportunities

l Finish strong

Strategic Question lWhere should we be? lWhat should we be? lHow should we proceed?

Source of Advantagel Unique, valuable position

with tightly integratedactivity system

lUnique, valuable,inimitable resources

l Key processes and uniquesimple rules

Works Best Inl Slowly changing, well-

structured markets

lModerately changing, well-structured markets

lRapidly changing,ambiguous markets

Duration of Advantage l Sustained l Sustained lUnpredictable

Riskl It will be too difficult to

alter position as conditionschange

lCompany will be too slowto build new resources asconditions change

lManagers will be tootentative in executing onpromising opportunities

Performance Goal l Profitability l Long-term dominance lGrowth

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Consumer Behavior Constants in the Networked Economy

l Customization

Personalization

l Interactivity

Ability to conduct two-way communication

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Chapter 1: Framework for E-Commerce


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Exhibit 13: A Comprehensive Framework

MediaInfrastructure

MediaInfrastructure

MediaInfrastructure

MediaInfrastructure

TechnologyInfrastructure

TechnologyInfrastructure

CapitalInfrastructure

CapitalInfrastructure

E-CommerceStrategy

E-CommerceStrategy

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Exhibit 14: E-Commerce Strategy

MetricsMetrics

ImplementationImplementation

MarketCommunicationand Branding

MarketCommunicationand Branding

Customer InterfaceCustomer Interface

Business ModelBusiness Model

Framing the Market OpportunityFraming the Market Opportunity

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The Four Infrastructures

Technology Infrastructure

l Technology foundation enables e-commerce enterprises

l Hardware

computers, routers, servers

l Software

l

l

Capital Infrastructure

l Funding the business

sources of funds

l Valuing the business

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The Four Infrastructures

Media Infrastructure

l Internet as a mass communication medium

l Publish, design and edit digital content

l

Public Policy Infrastructurel Laws and regulations

l Impact of the Internet on society

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Chapter 1: Framework for E-Commerce


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E hibit 1 5 R l t Di i li f S i E C

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Exhibit 15: Relevant Disciplines for a Senior E-CommerceExecutive

EntrepreneurshipEntrepreneurship

Strategic ManagementStrategic Management

TechnologyTechnology New MediaNew Media

AccountingAccountingOperations

and Logistics

Operationsand Logistics

FinanceFinance MarketingMarketing

Note: Shaded boxes reflect new capabilities

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Exhibit 16: A Flow Diagram of the Strategic Responsibilities

Set VisionSet Vision

Establish GoalsEstablish Goals

FormulateStrategy

FormulateStrategy

DriveImplementation

DriveImplementation

Be Accountablefor Performance

Be Accountablefor Performance

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Table 13: Where to Find Senior E-Commerce ManagersWithin Existing Bricks-and-Mortar Companies

Note: Line executives are accountable for profit and loss of the business;Staff personnel provide support services to line personnel

Corporate Business Unit Stand-Alone

Line Executive lCorporate sitemanagement

lCross business unitintegration site

lReport to GM ofbusiness unit

lSeparate businessfrom corporate

parent

Staff Executive lSupports corporate-wide initiatives

lSupports and

advises SBU e-commerceinitiatives

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The Challenges

Understanding Customer Evolution

l Tablestakes or cost of doing business

l Market research to understand how customer needs are evolving

Charting Changing Technologyl Choosing the right technologies matching consumer tastes to

technology choices

l

l

Balancing Irrational Exuberance and Irrational Dooml Estimating the impact of technology

l Weathering the storm reassuring stakeholders

l

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The Challenges

Integration of Offline and Online Activities

l Integration of customer-facing activities

advertising, branding, retail and store design, service,warranties

l Integration of systems, structure and processes

Identifying Key Levers of Competitive Advantage

l Reallocating resources as competitive advantage levers evolve

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l Conclusion

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Book Overview

The Basic Technology of the Internet and Web

l Chapter 2 Introduction to the Web and Internet

basic technology concepts: webpages, hyperlinks, protocols

l Chapter 3 The basic of doing business on the Internet

security, payment processing, customer service, etc.

Strategy Formulation for Online Firmsl Chapter 4 Framing the market opportunity

How to do a market analysis for networked-economy businesses

l Chapter 5 Business models

The four components of a Marketspace business model

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Chapter 6 The customer interface The 7Cs of customer interface

l Chapter 7 Communication and branding

Using new media communication approaches for competitiveadvantage

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Book Overview

Strategy Formulation for Online Firms

l Chapter 8 Implementation

How to do it

l Chapter 9 Metrics

The performance dashboard

Technology Infrastructure

l Chapter 10 The emergence and growth of B2B marketplaces

Net marketplaces and associated technologies

l Chapter 11 Collaborative commerce

Software and applications for a collaborative enterprise

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Book Overview

Capital Infrastructurel

Chapter 12 Early-stage business development: Human and financialcapital

Writing a business planl Chapter 13 Working with funders from seed stage to liquidity

Sources and stages of funding

Media Infrastructurel Chapter 14 Media transformation

From analog to digital platformsl Chapter 15 The Future of media usage

Dealing with media fragmentation

Public Policy Infrastructurel Chapter 16 Regulation

Self regulation vs. government regulationl Chapter 17 Internet and society

Changes and implications for society

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Conclusion

l Attributes of e-Commerce:

Digitized exchanges Technology-enabled and technology-mediated

Intra- and inter-organizational activities that support the exchange

l The four categories of e-commerce are:

Business-to-business Business-to-consumer

Consumer-to-consumer or peer-to-peer

Consumer-to-business

l Strategy lies at the heart of e-commerce activities. Wrapped around thestrategy are technology, capital, public policy and media infrastructures.

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Conclusion

l Classic strategic planning is inadequate for managing an e-commerce

enterprise. Sense-and-respond and strategy-as-rules approachescomplement classic strategic planning.

l Senior e-commerce managers are responsible for:

Articulating a vision

Setting process and outcome goals

Formulating strategic direction and choice Driving implementation

Being accountable for performance

l The challenges of a senior e-commerce manager include:

Understanding how customers are evolving

Anticipating technology changes

Setting realistic expectations regarding e-commerce benefits

Integrating online and offline activities

Identifying how e-commerce activities can be a source ofcompetitive advantage

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