The document discusses e-entrepreneurship and creating successful e-businesses. It defines e-entrepreneurs and the difference between bricks-and-mortar and virtual businesses. Key factors for e-business success include exploiting the network effect, using innovative marketing, ensuring scalability, adapting quickly to changes, and expanding the potential market by overcoming constraints of time and location. Successful e-businesses work to acquire visibility, build customer relationships, and create new products and services tailored for online delivery.
1. E-Entrepreneurship
OBJECTIVES
12-1 Explain the difference between bricks-and-mortar and virtual
businesses.
12-2 Discuss the scope of the e-entrepreneurship market and how to
address e-entrepreneurship in the business plan.
12-3 Explain the process of creating an e-business web site.
12-4 Discuss e-entrepreneurship and the law.
12-5 Evaluate an e-business web site according to a checklist of
important factors.
12-6 Discuss the myths of e-entrepreneurship.
12-7 Analyze common e-entrepreneurship mistakes.
2. E-entrepreneur
An e-entrepreneur is defined as an
individual willing to take the risk of
investing time and money in an
electronic business that has the
potential to make a profit or incur a loss.
E-entrepreneurship is the act of
managing an electronic enterprise that
has the potential to make a profit or
incur a loss.
3. Bricks and Mortar Business
Has a material presence
Has a tangible location where potential
customers can actually walk in and
interact with employees
Examples: storefront, storage facility,
office space, or manufacturing facility
4. Virtual Business
Does not have a material space
designed to receive customers
Transacts most of its business online
Can deal with customers from any
location that offers Internet capability
5. The E-Entrepreneurship Market
Approximately 75 percent of Americans
have access to the Internet from home.
That means over 200 million people are
potential customers for the
entrepreneur with an Internet site.
6. History of E-Entrepreneurship
In the early 1990s, electronic data interchange was
standardized and companies could reliably complete
transactions among themselves.
In 1992, Compuserve offered online retail products to
its customers.
Netscape arrived on the scene in 1994 and provided
users with a simple and colorful browser with which
to surf the Internet.
Netscape also provided a safe online transaction
technology called Secure Sockets Layer.
7. (continued)
History of E-Entrepreneurship
The following year saw the launch of Amazon.com
and eBay.
In 1998, DSL, or Digital Subscriber Line, which
provided fast, always-on Internet service, was offered
to customers across California.
By 1999 retail spending over the Internet reached an
estimated $20 billion.
In 2004, the U.S. government extended the original
1998 moratorium on Internet taxes until at least 2009.
8. E-Entrepreneurship
in the Business Plan
The e-entrepreneurship components of the
business planning process integrate your
Internet site and your basic business model.
They should address web site planning,
development, marketing, legal, financial,
management, and special considerations.
They should be designed to ensure that your
Internet content reaches the right customer
while leveraging the full value of the Internet
as a marketing tool.
9. Create an E-Business
The first step toward e-entrepreneurship
is usually the selection and registration
of a domain name, which is the unique
name that identifies an Internet site.
The selection of a domain name is a
chief concern when doing business
online.
10. Domain Name Process
Choose a domain name that is easy to
remember and is not easily confused with
other names.
Use a search engine to check for other
companies using the same name or a
derivation of it.
Through registration it becomes a legitimate
part of the Domain Name System (DNS).
11. Domain Name System
Every computer linked to the Internet has an
exclusive address, called its Internet
Protocol (IP) address.
The DNS makes using the Internet easier by
allowing a recognizable string of letters (the
domain name) to be used instead of the
numeric IP address.
So instead of keying a long number, you can
key the URL (Uniform Resource Locator), for
example http://domainname.com.
12. ICANN
Registration of domain names is controlled by
a private-public partnership called the
Internet Corporation for Assigned Names
and Numbers (ICANN).
Numerous companies have been accredited
by ICANN to act as registrars.
Domain names can be registered through the
many different registrar companies.
13. Components of
an E-Business Site
Web site design
Content
Web host
Security and/or firewalls
Search site submission
On-site search engine
Database software
14. Additional Features
Needed for Online Payment
Product catalog
Shopping cart
Merchant account provider
Alternative payment options
Order fulfillment
Customer service
E-mail notification
Customer FAQs
15. E-Entrepreneurship and the Law
Fraud and deception are unlawful no
matter what the medium.
The Federal Trade Commission has
enforced and will continue enforcing its
consumer protection laws.
16. Advertising
Online consumers are protected by
many of the general principles of
advertising law that also apply to
Internet ads.
The same consumer protection laws
that apply to commercial activities in
other media apply online.
17. Spam
Spam is defined as unsolicited “junk” e-
mail sent to large numbers of people to
promote products or services.
18. E-Consumer Complaints
The FTC has an online general
complaint form that can be used by
consumers to register complaints
relating to online transactions in the
U.S.
Another FTC form may be used for e-
business complaints involving a foreign
company.
20. Global E-Entrepreneurship
Agreement Guidelines
Fair business, advertising, and marketing
practices
Enough information to allow consumers to
make informed choices, including disclosures
about online businesses, their goods and
services, and the terms and conditions of sale
Clear processes for confirming transactions
Secure payment mechanisms
21. Global E-Entrepreneurship
Agreement Guidelines (continued)
Timely and affordable dispute resolution and
redress processes
Privacy protection
Consumer and business education
International government cooperation
22. Application of OECD Guidelines
Follow fair business, advertising, and marketing
practices.
Provide accurate, clear, and easily accessible
information about the company and the goods or
services it offers.
Disclose full information about the terms, conditions,
and costs of the transaction.
Ensure that consumers know they are making a
commitment to buy before closing the deal.
Provide an easy-to-use and secure method for online
payments.
23. (continued)
Application of OECD Guidelines
Protect consumer privacy during electronic
transactions.
Have policies and procedures to address consumer
problems quickly, fairly, and without excessive cost or
inconvenience to the consumer.
Adopt fair, effective, and easy-to-understand self-
regulatory policies and procedures.
Help educate consumers about electronic commerce,
thereby contributing to a consumer-friendly electronic
marketplace.
24. Better Business Bureau/
BBB Online
Code of Online Business Practices
Truthful and accurate communications
Disclosure
Information practices and security
Customer satisfaction
Protecting children
26. Myths of E-Entrepreneurship
E-entrepreneurship is a no-brainer.
E-entrepreneurship is cheap.
The best price is always online.
E-commerce will kill traditional retail.
E-entrepreneurships make an obscene
amount of money.
E-entrepreneurship is not safe.
27. (continued)
Myths of E-Entrepreneurship
E-entrepreneurship success depends
on the right technology.
Getting products to consumers is an
e-entrepreneur’s biggest cost.
Most Web consumers are “young.”
If a product or service can be sold, it
can be sold on the Web.
Everyone else is selling online.
28. 15 Most Common
E-Entrepreneurship Mistakes
1. Trying to sell the wrong product online
2. Misjudging the web site’s potential
3. Forgetting that a first impression can
only be made once
4. Making the site too complicated
5. Using a complicated navigation system
6. Forgetting to list your phone number
7. Supporting only one browser
8. Featuring out-of-date content
29. 15 Most Common
E-Entrepreneurship Mistakes (continued)
9. Requiring excessive download times
10. Ignoring customer service
11. Not validating the functionality of your site
12. Not merging your web site with your
conventional business
13. Not promoting the site
14. Using spam promotion
15. Failing to deliver products
31. Learning Objectives
Identify entrepreneurial abilities
Describe the entrepreneurial process
Understand the factors affecting e-
business success
Identify ways to exploit e-business
advantages
31
32. The Entrepreneur and the
Entrepreneurial Process
Entrepreneur
Assumes the risks of starting and operating
his or her own business
Must be able to lead others
Must believe in his or her business idea
Must have the self-confidence to accomplish
business goals
32
33. The Entrepreneur and the
Entrepreneurial Process (continued)
E-business entrepreneur examples
Jeff Bezos, Amazon.com
Pierre Omidyar, eBay
Kelby Hagar, GroceryWorks.com and Digital
Witness
Jason Zasky, Failure Magazine
33
34. The Entrepreneur and the
Entrepreneurial Process (continued)
Entrepreneurial abilities
Leadership traits
High-energy level
Self-confidence
Organizational skills
Ability to act quickly and decisively
Independent, goal-oriented, creative,
competitive
34
35. The Entrepreneur and the
Entrepreneurial Process (continued)
Entrepreneurial process
Stage 1: Are you an entrepreneur?
Assess your entrepreneurial abilities
Evaluate time and effort involved in
starting/running your own business
Consider the effect of the business commitment on
your family life
35
36. The Entrepreneur and the
Entrepreneurial Process (continued)
Entrepreneurial process (continued)
Stage 2: Buy existing business or start own
business?
36
37. The Entrepreneur and the
Entrepreneurial Process (continued)
Entrepreneurial process (continued)
Stage 3: For a new business startup you must
Define the business idea
Create a business plan
Secure financing
37
38. The Entrepreneur and the
Entrepreneurial Process (continued)
Entrepreneurial process (continued)
Stage 4: Operate and grow your business
38
39. The Entrepreneur and the
Entrepreneurial Process (continued)
Entrepreneurial process (continued)
Stage 5: Harvest your business
Continue to operate “cash cow”
Go public
Sell the business
Liquidate the business
39
41. Factors Affecting
E-Business Success
The network effect
Total value of a product, service, or
technology grows as more and more people
use it
Telephone system example
Single telephone has no value; as more people join the
telephone system, the value of each telephone increases
uBid online auction site example
As more people participate, the auction site becomes
more valuable to buyers and sellers
41
44. Factors Affecting
E-Business Success (continued)
Innovative marketing ideas
Hotmail and viral marketing example
Hotmail users grew at a rapid rate because of
electronic word of mouth coupled with the network
effect
Electronic word of mouth or viral marketing
spreads from user to user in the same way a
human virus spreads from person to person
44
46. Factors Affecting
E-Business Success (continued)
Scalability
Ability of a business to function well in the
face of rapid growth
Systems and procedures meet customers needs
AllAdvantage e-business failure example
E-business idea: Paying for users to browse the Web
and view advertising
Millions of customers signed on; advertisers did not
No scalability with rapid growth in customers
46
47. Factors Affecting
E-Business Success (continued)
Ease of entry into electronic markets
Low-cost technologies make it easy to create
new e-businesses
eBay and online auction example
Easy for consumers to interact at auction site
Web auction software is cheap and easy to
install /maintain
E-businesses earn commissions without having to
manage, warehouse, and distribute products
47
49. Factors Affecting
E-Business Success (continued)
Ease of entry into electronic markets
(continued)
Competitive barriers to overcome
Failure to secure first-mover advantage
Lack of name identification
Lack of customer loyalty
49
50. Factors Affecting
E-Business Success (continued)
Ability to quickly adapt to marketplace
changes
Rapid knowledge transfer
Need to make decisions quickly
Exploit new ideas and opportunities
Handle new challenges
Amazon.com is an example of ongoing evolution
from a basic e-business idea
50
52. Exploiting E-Business
Advantages (continued)
Expand the market
Business and consumers are no longer bound
by constraints of time, space, physical
location
Opportunity to reach larger market
Ticketmaster example
52
54. Exploiting E-Business
Advantages (continued)
Acquire greater business visibility
Get business name, products, and services in
front of potential customers more quickly
Auto industry example
54
57. Exploiting E-Business
Advantages (continued)
Use power of the Internet and Web to
maximize customer relationships and
improve responsiveness
Create customer loyalty
Stay in touch with customer needs
Build one-on-one relationships
Provide information to enrich customers’
online experience
Southwest Airlines example
57
59. Exploiting E-Business
Advantages (continued)
Create new products and services
Opportunities for new e-business ideas where
products or services are accessed over the
Web
Business software applications
Server facilities for data file backup
Legal dispute resolution
Cybersettle example
Web hosting services
Rackspace Managed Hosting example
59
62. Exploiting E-Business
Advantages (continued)
Reduce costs of running a business
Sales and customer support costs
Transaction costs
Order handling costs
Dell Computers, Cisco Systems, and Microsoft
Corporation examples
62
65. Summary
An entrepreneur assumes the risks of
starting and operating his or her own
business
Entrepreneurial abilities
Leadership
High-energy
Self-confidence
Organization skills
Ability to act quickly
65
66. Summary
(continued)
Five stages of the entrepreneurial process
Decide if you are an entrepreneur
Decide to buy or start new business
Plan the business
Operate the business
Harvest the business
66
67. Summary
(continued)
Factors that can affect e-business
success
Network effect
Innovative marketing ideas
Scalability of the e-business idea
Cost of entry into the marketplace
Ability to overcome competitive barriers
Ability to exploit inherent advantages
67