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New Business Models and the Internet

New Business Models and the Internet. Supply Side of the Internet Economy. Makers of communications components and equipment Providers of communications services Makers of computer components and hardware Developers of software E-commerce enterprises.

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New Business Models and the Internet

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  1. New Business Models and the Internet

  2. Supply Side of the Internet Economy • Makers of communications components and equipment • Providers of communications services • Makers of computer components and hardware • Developers of software • E-commerce enterprises

  3. Characteristics of the E-commerce Environment • Compete globally • Competition is heightened • Existing rivals • New entrants • Low barriers to entry • Buyers have bargaining power • Search globally for best suppliers

  4. Characteristics of the E-commerce Environment • Technology advancing rapidly • Faster diffusion of new technology • Companies must move quickly • Opportunities to retool value chains • Economically deliver customer service • Readily available capital (again…) • Need for human talent is greatest

  5. Business Models and Strategies:Communications Equipment Suppliers • Invest heavily in R & D • Form strategic alliances • Acquire complementary companies • Hedge your bets

  6. Business Models and Strategies:Communication Services Suppliers • Access for a fee • Flat rate, or • Charge by volume • Bandwidth • Bundling • Name recognition and advertising

  7. Business Models and Strategies:Computer Hardware Suppliers • Invest heavily in R & D • Rapid technological change • Must stay abreast or ahead of rivals • First-movers only can charge a premium • All others must compete on price

  8. Business Models and Strategies:Software Developers • Most costs are up-front • Profitability depends on volume • Revenues enhanced by upgrades • Transaction-based application may charge fee per transaction • Rent, or subscription

  9. Business Models and Strategies:E-commerce Retailers • Traditional retailing • Merely using Internet to interface • Many “brick and mortar” firms are becoming involved • Sell at, or below cost • Sell advertising space on web site • Sell information collected from users

  10. Business Models and Strategies:E-commerce Retailers • Spend heavily on advertising • Add new product lines with increase in traffic • Be a first-mover • Keep web site • Attractive • Innovative • entertaining

  11. Business Models and Strategies:E-commerce Service Suppliers • Identifying market niches • Examples • Warehousing and delivery • Internet intermediaries match buyers and sellers • Priceline.com • E-Bay • Rental services • Visa, MasterCard, Amex, etc.

  12. Business Models and Strategies:Media Companies and Content Providers • Content providers • Purchase content • Give content to visitors usually for free • Key success factors • Create a sense of community • Deliver • Convenience • Entertainment • Value • Revenue enhances by advertising and sales

  13. Business Models and Strategies:Traditional Businesses and the Internet • Use technology to communicate and collaborate with suppliers • Revamp value chains • Mass customization • Offer customers a choice of interaction • New distribution channel to reach buyers • Gather market data on customers

  14. Business Models and Strategies:Key Success Factors • Innovative business models • Capability to adjust model quickly • Focus on a limited number of specialized value chain activities • Stay on the cutting edge of technology • Innovative marketing techniques • Engineer to enable generic strategies

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