manajemen keuangan & teknologi e-bisnis program pascasarjana, universitas gunadarma, magister...

Manajemen Keuangan & Teknologi E-BisnisManajemen Keuangan & Teknologi E-Bisnis

Program Pascasarjana, Universitas Gunadarma, Magister Management , Budi Hermana-1

Market ICT profile

Introduction IT and Bussiness Concept of Internet

Measurement

Cost Pricing

E-Finance

Type and Model Economic framework

Manajemen Keuangandan Teknologi E-Bisnis



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nSignificance of ecommerce• U.S Census Bureau estimates that there was $6.373 billion

retail in 3rd quarter 2000• 15.3 percent increase from 2nd quarter 2000• Over 100 Ecommerce businesses closed shop in 2000• 0.78 % of total retail sales • During the same quarter total retail declined 0.4%

Benefits of ecommerce

• Access to global markets

• Lower cost of business

• Convenience to the customer



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n Continued Growth• Hosts: 36,739,000 (7/98); 16,729,000 (7/97)

– .com: 10,301,570– .net: 7,054,863– .edu: 4,464,153

• Web servers: 3.35M (10/98); 130%

• Bill Goffe, Univ. of Southern Mississippi

• Bob Parks, Washington University

• George Greenwade, Sam Houston State University



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Intr

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IT a

nd

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ess The Imperatives of Technology

• Applications of technology require precise subdivision and coordination of activities.

• Large-scale subdivision generates complexity which must be comprehended and managed.

• Complexity extends production processes in time and space.– Spatial extension through the supply chain

– Temporal extension through component fabrication and assembly



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Bu

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ess The Imperatives of Technology

• Microeconomic Consequences:– Large overhead costs.– Significant economies of scale and scope.– Multi-dimensional product characteristics.

• Consequences for Industrial Organization – Strategic rather than competitive environment.– Non-price competition (branding and product

differentiation).



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IT a

nd

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ess Information and the Economic Landscape

• What is the role of information in the economic landscape?

• The Hayek model: Competitive paradigm – Prices are sufficient statistics for information about the

state of the market.

– Competitive markets aggregate economic information.

– Decentralized decision-making requires only prices as inputs to decision processes.



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nd

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ess Information and the Economic Landscape

• Strategic distortions of the competitive model:– Information is internalized in the supply chain and

through long-term contracting relationships between firms.

– Market segmentation and price discrimination mask information content of prices.

– Product differentiation fragments information.

– Strategic interactions (pricing and marketing) entangle information through versioning and bundling decisions.



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nd

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ess The Internet and the New Economy

• Information technology is simultaneously intensifying the strategic features of the economic landscape, while making it more competitive.– Strategic Intensification

• Greater scope for both B2B and B2C commercial interactions

• Tightening of existing supply chains through internet data transfer protocols

• Dis- and re-intermediation of consumer sales.



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ess The Internet and the New Economy

– Intensification of competition• Digital goods and services are the most extreme examples of

the technological imperative: All costs are fixed costs -- marginal cost is zero.

• Wide-spread adoption of information technology puts zero cost production (copying) capabilities in everyone’s hands.

• Wide-spread adoption of technology gives economic agents vastly expanded access to information about products and prices.



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Electronic Transaction

Transaction Performance:

Selected Price

Transaction-Related Value Sources: Transaction Characteristics

Technology-Related Value

Sources: Search, Evaluation

and Selection Capabilities

Transaction Process

Traditional Transaction

Buyer-Related Value Sources: Buyer Behavior

Traditional vs electronic transaction



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Con

cept

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Inte

r ne t What is the Internet?

Where did it come from?

The Internet is a world-wide network of computer networks that use a common communications protocol, TCP/IP (Transmission Control Protocol/Internet Protocol). TCP/IP provides a common language for interoperation between networks that use a variety of local protocols (Ethernet, Netware, AppleTalk, DECnet and others).

In the late sixties, the Advanced Research Projects Administration (ARPA), a division of the U.S. Defense Department, developed the ARPAnet to link together universities and high-tech defense contractors. The TCP/IP technology was developed to provide a standard protocol for ARPAnet communications. In the mid-eighties the NSF created the NSFNET in order to provide connectivity to its supercomputer centers, and to provide other general services. The NSFNET adopted the TCP/IP protocol and provided a high-speed backbone for the developing Internet.



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Inte

r ne t What do people do on the Internet?

How big is the Internet?

Probably the most frequent use is electronic mail (e-mail). After that are file transfer

(moving data from one computer to another) and remote login (logging into a computer that is running somewhere else on the Internet). In terms of traffic volume, as of December 1994 about 32% of total traffic was file transfer, 16% was World Wide Web (WWW), 11% was netnews, 6% was email, 4% was gopher, and the rest was for other uses [Merit Statistics]. People can search databases (including the catalogs of the Library of Congress and scores of university research libraries), download data and software, and ask (or answer) questions in discussion groups on numerous topics (including economics research).

From 1985 to December 1994, the Internet grew from about 200 networks to well over 45,000 and from 1,000 hosts (end-user computers) to over four million. About 1,000,000 of these hosts are at educational sites, 1,300,000 are commercial sites, and about 385,000 are government/military sites, all in the U.S. Most of the other 1,300,000 hosts are elsewhere in the world [Network Wizards]. NSFNET traffic grew from 85 million packets in January 1988 to 86 billion packets in November 1994. (Packets are variable in length, with a bimodal distribution. The mean is about 200 bytes on average, and a byte corresponds to one ASCII character.) This is more than a six hundred-fold increase in only six years. The traffic on the network is currently increasing at a rate of 6% a month. (NSFNET statistics are available at Merit’s Network Information Center1.)



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Types of ecommerce• Business to business

– Example ESIP 1 to ESIP 3 ecommerce

• Business to consumer– Distributing data products to non ESIP

customers.

• Both types have different needs and resources.

• Both types of customers can be served



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s Barriers to success in ecommerceSurvey from commerce.netTop Ten Barriers to ecommerce, 20001. Security and encryption 2. Trust and risk 3. Lack of qualified personnel 4. Lack of business models 5. Culture 6. User authentication and lack of public key infrastructure 7. Organization 8. Fraud and risk of loss 9. Internet/Web is too slow and not dependable 10.Legal issues



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s Business Models• The method of doing business by which a company can generate

revenue.

• The business model spells-out how a company makes money by specifying where it is positioned in the value chain.

Ecommerce Models

• There are many models being talked about, so it depends on who you are asking.

• Useful Categories– Transplanted real world business models

– Native internet business models



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s Internet economics is different from real world economics• Real World

– It is based on supply and demand– Value comes from a scarcity of goods and

services.

• Internet– Scarcity doesn’t exist on the web. There is

almost no cost to replicate data.– The economics of abundance makes attention

valuable.



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s Native Internet Models

Library The internet is a source of free information

Freeware Software is distributed free of charge GNU or Netscape

Information Barter Provide information in trade for the use of a product

Digital Products and digital delivery

Images animation text that is purchased

Access provision ISPs

Web site hosting and other internet services

Electronic mail or web sites



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s High Level ModelsBrokerage •Bring together buyers and sellers • charging fees for transactions

Advertising •Extension of media broadcast •high volume or specialized

Infomediary •Collect data regarding usage •Sell collected information

Merchant •Classic wholesale and retail •Fixed prices or Auctions

Manufacturer • Direct to consumer •Compress the supply chain

Affiliate •Distribute purchase opportunity Sites get paid for referrals

Community •Based on loyalty •Subscription or sponsors

Subscription •High value content •May combine free and pay

Utility •Pay for what is used •May depend on byte payments



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s Brokerage ExamplesMarket Exchange (Common B2B model) Broker charges the seller a transaction fee baed on the value of the sale. Pricing can be offer/buy offer/negotiated buy, or an auction offer/bid approach.

Virtual Mall -- A site that hosts many online merchants. The Mall typically charges setup, monthly listing, and/or per transaction fees.

Metamediary -- a business that brings buyers and online merchants together and provides transaction services such as financial settlement and quality assurance. It is a virtual mall, but one that will process the transaction, track orders, and provide billing and collection services.

Auction Broker -- A site that conducts auctions for sellers (individuals or merchants). Broker charges the seller a fee, which is typically scaled with the value of the transaction.



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s Advertising ExamplesGeneralized Portal high-volume traffic driven by generic or diversified content or services The high volume makes advertising profitable and permits further diversification of site services.

Personalized Portal The generic nature of a generalized portal undermines user loyalty. The profitability of this portal in based on volume and possibly the value of information derived from user choices.

Specialized Portal Also called a "vortal" (i.e., vertical portal). Volume is less important than a well-defined user base This can be highly sought after as a venue for certain advertisers who are willing to pay to reach that particular audience

Free Model Give users something for freeFreebies create a high volume site for advertising opportunities. Viability is hardest when based purely on advertising revenue. Opportunity to blend with infomediary model.



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Infomediary ExamplesRecommender System A site that allows users to exchange information with each other about the quality of products and services -- or the sellers with whom they have had a purchase experience (good or bad). Recommender systems can take advantage of the affiliate model offered by merchants to augment revenue from the sale of consumer information.

Registration Model Content-based sites that are free to view but require users simply to register (other information may or may not be collected). Registration allows inter-session tracking of users' site usage patterns and thereby generates data of greater potential value in targeted advertising campaigns. This is the most basic form of infomediary model.



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Merchant ExampleBit Vendor a merchant that deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web.

Virtual Merchant a business that operates only over the web and offers either traditional or web-specific goods or services (a.k.a., pure-play e-tailers). The method of selling may be list price or auction

Surf-and-Turf Traditional brick-and-mortar establishment with web storefront. The model has the potential for channel conflict. Physical stores can prove to be an asset if cleverly integrated into web operations. Also known as "bricks-and-clicks".

Catalog Merchant The migration of mail-order to a web-based order business.



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Eco

nom

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k Perspective on Market Transactions (Dholakia et all)



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k Economic Effects of Internet and Impacts on Marketing (Dholakia et all)



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k Measuring The Internet Economy (O’Donnel)

Four Layer (CREC Univeristy of Texas)

Internet Infrastructure : including Telecommunication Company, Internet Backbone Providers, Internet Service Provider

Internet application infrastructure: principally, software required for internet services, but also consulting and service company hired to build web sites

Internet IntermediaryInternet Commerce



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Four Common Topics in Economics

• Cost

• Price

• Demand– Substitutes and Complements

• Externalities



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Cos

tCost

• Producing• Duplicating• Distributing• Capacity Limits

• Phone Service• Movies• Music• Stock Quotes• Magazines

Internet



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The Cost of Information

• The cost of producing the first unit of a digital good is generally not small, and can be substantial.

• As we have seen, the indestructibility and reproducibility of digital goods means that the marginal cost of producing an additional unit of the good is close to zero.

• Because the cost of storing and transmitting stored information is cheap (and continues to get cheaper), there are also no effective capacity constraints on the production of digital goods.



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tHOW IS INTERNET ACCESS PRICED?

What other types of pricing have been considered?

There are three main elements of network costs:

The cost of connecting to the net,

The cost of providing additional network capacity, and

The social cost of congestion.

To reduce congestion

Peer pressure and user ethic

Quee and priority

Overprovisioning



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Cost Issues

• In typical networks, most of the cost of building and operating the network is fixed, with the marginal cost of providing network services (transportation, communication, transactions) generally small.

• This implies that as the network increases in size, the average cost of providing network services decreases.

• Hence, there are natural incentives with networked technologies for firms that operate the technology to grow in size.



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Pricing of Access to The Internet

• Flat Pricing• Auction Approach• Static Priority Pricing• Dynamic Priority Pricing• PMP Approach

Pricing of Goods and Services onThe Internet ?



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gPrice• Value not cost• Segment• Personalize• Bundle

• Movie Theaters • Airlines• Books• Printers• Lexis-Nexis• Amazon.com• Super Markets Online

Internet



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Microsoft vs. Britannica

• Pre-internet: 32 volume set of Encyclopedia Britannica cost $1600 in hardback.

• Microsoft’s strategy for marketing electronic encyclopedic services:– purchase Funk & Wagnalls Encyclopedia

– use the content of F&W to produce a CD with multimedia enhancements and a user friendly search facility

– market the result as MS Encarta for $49.95



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• Result:– Britannica loses significant market share to the search

features and multimedia enhancements of Encarta and other electronic encyclopedia’s.

– Britannica fights back:• Online version for libraries (cost: $2000)

– But households, smaller schools and libraries continue to defect to cheaper electronic encyclopedias and online encyclopedia services

• Britannica offers an online subscription for individuals for $120/yr and CDROM for $200.

– Households still not willing to pay 4 times the cost of Encarta

Microsoft vs. Britannica



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gThe Basic Rule for Profit-Maximization• (Price - Marginal Cost)/Price = 1/-Ed

• Not an operational decision rule - a statement of the condition required for maximum profit

• Can be re-stated in an “average cost plus margin” format

Pricing and Market Structures• Under perfect competition, firms are price-takers

• Under monopoly, firms are price-makers (but still constrained by the requirement to make maximum profit)

• Under monopolistic competition, prices settle at the ‘excess capacity’ level where P=AC

Price Discrimination• Price discrimination exists when the same product is sold for different prices, that are

not attributable to differences in the cost of supply

• Two conditions are needed:

– the market must be divisible into sub-markets between which there cannot be any arbitrage

– demand conditions (elasticity) must be different in the sub-markets



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gThird Degree Price Discrimination• A number of sub-markets, each containing a number of potential customers• These markets may be separated by:

– distance ( car prices differ between Europe and the UK - but is it really price discrimination?)

– time (for non-storable commodities) - peak versus off-peak journeys– age and status - Student Railcards, Old Person Railcards

Second Degree Price Discrimination• Customers are charged one price for the first block of units they purchase, then

a different price for the second block– electricity, water, gas tariffs– the producer appropriates part of the consumer surplus

First Degree Price Discrimination• Every buyer is charged the maximum they are willing to pay (the demand

curve becomes the marginal revenue curve)• Can be difficult to evaluate willingness to pay but first degree discrimination

may be possible in personal, household or commercial services • Note that the socially optimal level of output will be produced but all the

surplus accrues to the producer



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Market Structure Issues

• The decreasing cost structure and incentives for firms to grow will typically lead to market structures which are not competitive

• Rather, they are characterized by the emergence of monopolies or oligopolistic industry structures, with substantial degrees of both upstream (supply chain) and downstream (distribution network) integration.

• One focus of the course, then, will be to examine issues of industrial organization in networked economic environments.



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Market Structure Issues

• Positive Feedback– The larger the network, the greater the incentive to join

• Example: Wintel network

– Within the network, don’t need adapters for file sharing or communication

– Outside the network, these activities become expensive

• When positive feedback effects are strong, it can lead to market tipping, with the largest component of the network growing at the expense of competiting networks.



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tMarket Strategy Issues• The nature of the demand for networked goods, and the underlying technology involved

in the supply of networked goods determines the optimal strategy for providing such

goods

• Strategic dimensions include:

– Compatibility or incompatibility

– Cooperation or competition

– Degree and mix of quality provided

• Dynamics and feedback effects in market organization– Technology dictates standards and decision on whether or not to provide

compatibility across different products

– These decisions determine the way industry structure will evolve (monopoly, oligopoly, monopolistic competition, competition)

– Market structure then determines pricing and profit margins

– Hence, anticipations about the evolution of market structure are important inputs into the decision on standard setting

• Example: Microsoft’s recent negotiations with AOL over standards for Windows XP



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tWhat will be the market structure of the information highway?

One interesting question is the interaction between pricing schemes and market structure. If competing backbones continue to offer only connection pricing, would an entrepreneur be able to skim off high-value users by charging usage prices, but offering more efficient congestion control? Alternatively, would a flat-rate connection price provider be able to undercut usageprice providers, by capturing a large share of low-value "baseload’’ customers who prefer to pay for congestion with delay rather than cash?



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tInternet Market Segment

Content Growing rapidly

$1.6B in revenue

Portals Raging phenomenon but nearly dead

AOL: 34M subscribers, MSN: 8M subsribers, Yahoo: 1/3 of the portal market $2B in revenue

Advertising Declined over the last two years

for 2002 $5.5B in revenue

Web Hosting Dilemma: Customers will require less and less space for increasingly powerful server and price of the connectivity is falling. In 2000, the hosting market’s revenue approximately $4B

ASPs One of the fastest growing segment of the internet economy

Industry estimates vary from $1B to $3B range in revenue

Backbone Highly concentrated segment (in 2002, top-tep backbone providers control 92% of the market)

But (profit) margins are not generous.

CDNs CDNs expedite the delivery of internet content. Approximately $300M in 2001. The most widely recognized CDN operator is Akamai, with a 60-70% market share.

ISPs ISPs are the one sure expenditure for conumers. In 2002 ISP market to be approximately $31B, almost equally divided between consumer and bussines market.

E-commerce The value of of B2C commerce in 2002 will be approximately $40B. The B2B market is substantially larger than B2C segment. In 2001 volume of B2B transaction was approximately $1B.



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Me a

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digi

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Indonesia ?



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• Making payment in the physical word

• Making payment in cyberspace using traditional payment instrument

• Making payment in cyberspace using new means of payment

Alternative Currencies• Digital cash• Reward currenciesBrokerage MonetaryValue

• Credit Card• Cardless charge account• Debit Cards• Checks• Stored Value

How monetary value is exchanged?How payments are made?• Cash• Checks• Debit Cards• Credit Cards• Stored value



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ceE-Finance

“The provision of financial services and markets using electronic communication and computation”

(Allen, McAndrews, and Strahan, 2002)

The use of electronic payment system

The operation of financial services firms

The operation of financial markets

3 Area



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ceE-Finance and the financial services industry

Adoption of e-finance by financial services firms

Financial intermediaryInsuranceSecurities firms

The effects of E-finance on the financial services sector

DisintermediationConsolidationAcces to Credit

E-Finance technologies in payment services

The impact on financial markets

Stock marketsForeign exchange marketsBond Market

---------Jakarta Automated Trading System (JATS)

Sistem Kliring ElectronicReal Time Gross Settlement (RTGS)Fedwire (US-RTGS)CHIPSSWIFTCHAPSTARGET



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ceE-Finance:Reshaping Financial Landscape

Recent Trends in financial services

Globalization• Increased financial integration• Increased mergers and acquisitions within and cross borders• Lower barriers between markets

The new world of financial services• Technological advances• Change in industry structure• The new model for financial services provision• Change in trading systems

What effect ?• Lower costs for providing financial services• Benefits for consumers and corporations

Access Devices

PortalDistributions

Agregrators

FinancialInstitutions

FinancialProduct

ElectronicEnablers

(Claessens, Glaessner, Klingebiel, 2002)



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ceE-Finance:Reshaping Financial Landscape Characteristics of Financial services provision in an internet world●None

● ● Low

● ● ● Medium

● ● ● ● High



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ceE-Finance:Reshaping Financial Landscape

Implication for public policy

Safety and soundness

Competition Policy

Consumer protection

Global public policy

• Definition of product, markets, and barriers to competition

• Scale and scope economies’ barriers to entry

• Organizational structure and competition

• Entry by nonbanks, links with banks, vertical integration, and competition

• Security risks• Privacy• Transparency• Investor protection• Development and enforcement of

standard



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As s

ign

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t • Technology Acceptence Model for E-commerce adoption

• Economics perspective of internet• E-business model and principles

manajemen keuangan & teknologi e-bisnis program pascasarjana, universitas gunadarma, magister...

Documents

universitas gunadarma

budi hermana

magister management

customer slide

quarter total retail

ecommerce businesses

nd quarter

rd quarter