Week 4 Ie 2033-PLUMS

  • 652 views
Uploaded on

PLUMS

PLUMS

More in: Business , Technology
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
652
On Slideshare
0
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
26
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. CHAPTER 4
    • COMPONENTS OF A BUSINESS MODEL
    • We will discuss the components of an Internet business model &
    • the linkages between its componen ts
  • 2. CHAPTER 4 COMPONENTS & LINKAGES BUSINESS MODEL PROFIT SITE PRICE SCOPE CUSTOMER VALUE REVENUE SOURCE CAPABILITIES IMPLEMENTATION CONNECTED ACTIVITIES SUSTAINABILITY COST STRUCTURE 1.DIFFERENTIATION 2.LOW COST 1.MARKET SHARE 2.GROWTH 3.TYPES OF PRICING MENU ONE-TO-ONE AUCTION REVERSE AUCTION BARTER PRODUCT FEATURES TIMING LOCATIONS SERVICE PRODUCT MIX REPUTATION 1.ACTIVITIES TO PERFORM 2.WHEN TO PERFORM 1.STRUCTURE,SYSTEMS PEOPLE 1.BLOCK STRATEGY 2.RUN STRATEGY 3.TEAM-UP STRATEGY 1.RESOURCES 2.COMPETENCIES 3.COMPETITIVE ADVANTAGE
  • 3. COMPONENTS & LINKAGES
    • Rationale for Components
    • To make money ,a firm must offer its customers something the customers value & the competitors cannot offer
    • Must find ways to retain its competitive advantage
  • 4. BUSINESS MODEL COMPONENTS
      • PROFIT SITE
      • CUSTOMER VALUE
      • SCOPE
      • PRICE
      • REVENUE SOURCES
      • CONNECTED ACTIVITIES
      • IMPLEMENTATION
      • CAPABILITIES
      • SUSTAINABILITY
      • COST STRUCTURE
  • 5. PROFIT SITE
    • It’s a location in a value configuration
    • Determines the competitive pressures from rivals, suppliers, customers, potential new entrants, complementors & substitutes
    • Attractive or useful if demands used by competitive forces is low
    • Chapter 2. pg 19 table 2.1
        • 1.e-commerce
        • 2.Content aggregators
        • 3. Brokers agents
        • 4. market-makers
        • 5. Service provider
        • 6.Backbone operators.
        • 7.isp/osps
  • 6. CUSTOMER VALUE
    • Customers buy product from a firm only if the product offers them something that competitor’s products do not.
      • Differentiation
      • Low cost products/services
  • 7. 1. Differentiation
    • Differentiation = customers think “ it has something of a value that other products don’t have” .
    • * 7 different ways can differentiate a product:
        • Product features
        • Timing
        • Location
        • Service
        • Product mix
        • Linkage between functions /Linkage with other firm
        • Reputation
  • 8.
    • 1.Product features
      • Offer features that competitor’s products do not have
      • E.g. emphasize the speed of a chip for a microprocessor manufacturer
      • Customization of an internet website
      • Localization of services & product offers
  • 9.  
  • 10.  
  • 11.  
  • 12.
      • 2.Timing
      • Be the first to introduce the product
  • 13.  
  • 14.  
  • 15.
    • 3. Location
      • Products with identical features can still be differentiated by virtue of their location
      • How?
      • E.g. ease of access to the product
      • ISP example Michigan VS New York
      • Service of both are different
  • 16.
    • 4. Service
      • How fast is the response of a product be attained by its sellers
      • E.g. after sales service of a certain product after it is broken
  • 17.
    • 5. Product Mix
      • One stop shopping for variety of goods are convenient for customers
      • E.g. Amazon. COM=16million items for sell
      • Use data to personalized their presentation of the store
  • 18.
    • 6. Linkages
      • Association with another firm
      • Larger web community
      • E.g.
  • 19.
    • 7.Brand name Reputation
      • Branding is always a winner
      • Internet offers a no other channel to established brand name reputations
      • Branding can be world wide, internet reaches more people
  • 20. 2. Low cost products/services
    • Firm’s product & services cost customers less than those of its competitors
    • Cost less for the firm to offer the customers of the product & services-the cost saving were passed on to the customers
    • Sell on the internet saves operating cost, distribution cost & transportation cost
    • Better coordination of activities = lower cost for producers
  • 21.  
  • 22.  
  • 23. BUSINESS MODEL COMPONENTS
      • PROFIT SITE
      • CUSTOMER VALUE
      • SCOPE
      • PRICE
      • REVENUE SOURCES
      • CONNECTED ACTIVITIES
      • IMPLEMENTATION
      • CAPABILITIES
      • SUSTAINABILITY
      • COST STRUCTURE
  • 24. SCOPE
    • Market segments or geographic areas to which the value should be offered
    • How much of the needs of the segment that it can make profit
    • E.g. a firm must decide how much demand of its teens segment needed that the firm needs to fulfill
    • Universality of the internet breaks the scope barrier.
  • 25. PRICE
    • Price your value properly/accurately to gain profit
    • Must have pricing strategy to avoid killing a product
    • We are in a “knowledge based economy”
    • Our product must provide complete information before entering the market
  • 26. ( Price e.g.) * To illustrate basis of pricing strategies for “knowledge based” products & services: p.g 58 text book.
    • PROFITS = ( P - V ) Q – F
    • P price per Unit of the Product
    • V price per Unit Variable Cost
    • Q total number unit sold
    • F fixed cost
    C C C C
  • 27. * To illustrate basis of pricing strategies for “knowledge based ” products & services: p.g 58 text book . FIRM A FRIM B R & D (Fixed Cost) $500 million $500 million Variable Cost $5 $5 Price per Unit $200 $200 Market Share 80% Market Share 20% Knowledge based - software – IT - content
  • 28. Market Share & margin are important!!
    • Firm with more market share make more profit for that year
    • Controlling of market share , involves in the early of introducing the product example
        • Giving away product C but charging product D
        • Pricing low to penetrate the market
    Example: Netscape Giving away for free the browser Netscape, but charging corporate customers for its servers Example: Most software companies Sells cheap software
  • 29. Growth are Revenues
    • Develop the market
    • Sell more units, you will increase the market
  • 30. Types of Pricing & the Influence of the Internet
    • MENU: Fixed pricing, seller sets price buyer buys it or leave it
    • ONE-TO-ONE: seller negotiates which price both accepts-
    • AUCTION: seller solicits bids from many buyer& sells to the highest bidder
    • RESERVE AUCTION: seller decides order of potential buyer
    • BARTER: swapping of goods for goods
  • 31. REVENUE SOURCES
    • Revenue sources: from products sold
    • Critical part in business model analysis
    • E.g. online stockbrokerage firm gain revenue sources from 3 areas:
        • Sales commission
        • Interest charge to clients
        • Spread of bid & ask price of stock
  • 32. CONNECTED ACTIVITIES
    • To offer outstanding products & charge premium price to the customers, a firm must perform connected activities for the basis of producing the product
    • Choose which activity to perform & when to perform it
  • 33. Which activity to perform
    • The activities should be consistent with the value that the firm offering
    • Take advantage of industry success drivers
    • Consistent with any capabilities that firm wants to build
    • Make industry more attractive for the firm
  • 34. When to perform activities
    • What are the characteristics of the industry at that stage of the life cycle & what will they be down the line
    • What are existing competitors doing & what are potential ones likely do
    • Are the activities consistence?
  • 35. IMPLEMENTATION
    • Means ‘ carrying out’/executing/performing the decision
    • The role of implementation, the relationship between
    1.structure 2.systems 3.people
  • 36. 1. structure
    • Who is supposed to report to whom & who is responsible for what so that the task in that organization are carried out
    • Functional organizational
    • Structure
    • People are grouped &
    • perform their task
    • according to traditional
    • functions
    • Enable to learn from each
    • other
    • Project Organizational
    • structure
    • People are organized not
    • by functional area
  • 37. 2. systems
    • How to keep people motivated as they carried out their task & responsibilities
    • Management must monitor performance & reward & punish individuals, workers, ect
    • Incentives, ideas, comments ect
  • 38. 3. people
    • To what extent do employees share a common goal?
    • Money, recognition, ideas, seeing as a person…does all this matter.
    • Organizational culture
    • Kaizen
    • The ‘F$%&’ you attitude ect.
    • UMS corporate culture?
  • 39. CAPABILITIES
    • RESOURCES
    • COMPETENCIES
    • COMPETITIVE ADVANTAGE
    Assets under financial statement Tangible - plants, equipment, cash reserves, PC, servers Intangible - patents, copyrights, reputation, brands, programmers. Ability of firm to turn its resources to a customer values & profits. Integration of more than one resources.e.g. APPLE experience. Core competencies: firm able to offer better value than other competitors . Advantage to the firm. Honda offers outstanding engines.
  • 40. SUSTAINABILITY
    • The ability of the firm to sustain its competitive advantage from its competitor.
    • How the firm uses its resources & strategies to stop competitors from gaining market share.
    • Uses 3 strategies:
        • Block strategy
        • Run strategy
        • Team-Up strategy
  • 41. Sustainability strategies BLOCK STRATEGY -Firm puts barriers around its product market space. -Uses Intellectual properties rights. -This strategy works only if, company has unique capabilities - Easier in the internet era uses reverse engineering. RUN STRATEGY -Thinks that blocking strategy fails. therefore, this strategy must change some of its components & linkages /b-model or maybe sometimes create a new business model to offer customer better value. -Gives first mover advantage -Example DELL TEAM-UP STRATEGY -If you can’t beat em’. Join em’ -nothing else works. -thro’ strategic alliances, joint venture acquisition, equity position. -allows sharing of resources it does have. - promotes knowledge transfer -creates ‘win-win situation’
  • 42. COST STRUCTURE
    • All process of executing business plan cost money.
    • Cost structure expresses the relationship between its revenues & the underlying cost of generating those revenues
    • To keep cost low firm must first determine its cost/identify its cost.
    • Lower its cost drivers .
    • Book example pg 73