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E business by bhawani prasad - iimc


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E business by bhawani prasad - iimc

  1. 1. E-Business Strategy Bhawani Nandan Prasad Management Education from IIM Calcutta and Stratford University, USA Bhawani Nandan Prasad 1
  2. 2. What Is Strategy • A strategy consists of a pattern of decisions that set the goals and objectives that lead to long run competitive advantages for a firm. – Undertake a SWOT analysis. – Determining distinctive competencies. Determining the competitive arena. – Develop a plan to reach the business goals. Bhawani Nandan Prasad 2
  3. 3. Definitions: • A value chain is a way of envisioning the collection of activities that a business undertakes to design, produce, market, deliver, and support products or services. • The Competitive Arena is the competitive environment in which a business competes. • Distinctive Competencies are unique areas of advantage where a firm can differentiate itself from competitors. Bhawani Nandan Prasad 3
  4. 4. Steps for Strategy Development • Undertake a SWOT analysis. – Evaluate the Strengths, Weaknesses, Opportunities, and Threats facing a business. • Determining distinctive competencies. – Analyze a business’s value chain to help identify internal strengths and weaknesses that can help determine how a business can compete. Bhawani Nandan Prasad 4
  5. 5. Steps for Strategy Development • Determining the competitive arena. – Determine the competitive environment in which a business competes • Helps set the mission • Indicates the windows of opportunity to be pursued • Identifies the competitive environment. • Develop a plan to reach the business goals. – Outline the strategic actions and tactics a business must undertake to move from where and how it currently competes to where and how it needs to compete given its distinctive competencies. Bhawani Nandan Prasad 5
  6. 6. Model of Strategy Development Strategy Environmental Forces Bhawani Nandan Prasad Competitive Threats Strategic Drivers Value Chain (Strengths & Weaknesses) 6
  7. 7. Business Models • A business model, or commerce model, is the basic process flow indicating how a business operates. • Business process modeling is a systematic approach to viewing organizations and the complex relationships that are required to make the business operate. Bhawani Nandan Prasad 7
  8. 8. Analyzing Business Models • Four perspectives: – – – – Functional perspectives: identifies the functions within a business an how they interact. Behavioral perspective: identifies when and how functions are performed in a business. Organizational perspectives: identifies where and by whom functions are undertaken. Informational perspectives: identifies what types of information are identified and how do they flow. Bhawani Nandan Prasad 8
  9. 9. Developing E-Business Models • • Requires a process of identifying the functional process flows of a business and then modeling how the application of e-business procedures can result in competitive advantage. This requires a six-step process: 1. Identify the functional areas and major player. 2. Indicate how these area are linked and the directions of the flow process. 3. Determine what e-business tools and techniques can be applied to the business model. 4. Develop a new e-business model flow. 5. Evaluate the competitive advantages of the model by using a value chain analysis. 6. Determine the likelihood of acceptance of the new model. Bhawani Nandan Prasad 9
  10. 10. E-BUSINESS STRATEGY • Low cost and therefore low price competitor. – A "frictionless" Internet market implies that customers have almost perfect information and can compare prices around the world (by using intelligence agents to search out the best prices enhances this process). • Differentiation strategy by finding a unique market position against competitors. Bhawani Nandan Prasad 10
  11. 11. Methods of Differentiation Differentiation Advantages Strategy Gain Speed & This provides a number of first mover First Mover advantages including Advantages costs, meeting needs, lowering risk, and lower prices. Gives buyers Build Brand assurance when Name interacting with a site. Allows for easy name recognition. Disadvantages Firms need to be flexible to be fast. Being first increases risks and may require large amounts of capital to maintain advantages. Requires a large amount of capital to obtain and maintain a brand name. Bhawani Nandan Prasad 11
  12. 12. Speed and First Mover Advantages • A pioneering firm has differentiated itself from competition because it is the first to enter a competitive arena or it is able help define the competitive arena. – Advantages: • Lower Costs • Meeting Current Needs • Lower Consumer Risk Perception • Charge Higher Prices Bhawani Nandan Prasad 12
  13. 13. Costs Advantages • May increase the business’ or product's time in a life cycle, spreading development costs over time and the number of products produced. Firms that follow have less time in the life cycle to recover all costs • An early entry firm can gain cost advantages through experience curves and when greater market shares are obtained they obtain greater economies of scale. Bhawani Nandan Prasad 13
  14. 14. Meeting Current Needs • The faster a business can respond to the market, the more likely that information from areas such as marketing research will be valid resulting in actions that could lead to higher market share. • First, movers have been shown to have a substantially higher market share than later entrants. A product that is six months late to market may miss out on one third of the potential profit over the product's lifetime. Bhawani Nandan Prasad 14
  15. 15. Consumer Risk Perceptions • First mover may become the comparison standard for all rival products by setting the standard for performance. • Consumers may lower the risk involved in purchasing by choosing a product with an established image or brand. • Innovators and early adopters may try first mover products first and influence others through the diffusion process. • Advertising and publicity aids in consumer search, but given the lack of alternative products in many innovative markets, advertising may have the effect of setting relevant product attributes the consumer uses in the evaluation process. Bhawani Nandan Prasad 15
  16. 16. Comparison Standard and Switching Cost • A comparison standard is what the customer uses to judge a product. – For example, if a customer had first gained their online search experience with Yahoo!, they will evaluate all other search engines against Yahoo. • A switching cost is the additional "costs" involved in learning something new. – The costs involved in adopting a new software package would include the software expense, support, training costs, and slowed productivity costs. Bhawani Nandan Prasad 16
  17. 17. First and Second Movers • Being the first entrant into a market does not guarantee a long term competitive advantage. A firm must have: – Expertise, resources, and creativity necessary to exploit first mover opportunities. • Pioneers must find ways to forestall or neutralize the efforts of later entrants or they will not gain first mover advantages. Bhawani Nandan Prasad 17
  18. 18. Building Barriers • Entry Into an Industry Can Be Limited by: – Gaining Economies of Scale – Cost Advantages – Developing High Switching Cost – Brand Names – Strong Customer Relationships • Development of Portals Bhawani Nandan Prasad 18
  19. 19. Brand Names • A brand is a sign, symbol, design, term, name or combination that allows for easy recognition of a product or company. – Brand names often give assurance to the purchaser because they believe that the risk of using a brand name is lower. • Build online brand names by: – Online and offline advertising – Ease of navigation and overall experience that a user has with the Web Site. Bhawani Nandan Prasad 19
  20. 20. Portals • A portal is an entranceway onto the Internet. • They are often the preferred starting point for: – Searches – Entertainment – Information, – Email, – Or any other Internet based product. Bhawani Nandan Prasad 20
  21. 21. Alliances & Acquisitions • The creation of an e-business value chain may come from forming alliances or through the acquisition. – Alliances are formal or informal relationships between independent companies that work together for a common purpose. – An acquisition exists when one corporation purchases all or a controlling part of another company. Bhawani Nandan Prasad 21
  22. 22. E-business Infrastructure
  23. 23. Learning Objectives • • • • • To understand – Role of backend systems in implementation of ebusiness. Technological expectations from e-business framework Fundamentals of essential technologies as a background for e-businesses Internet protocols and their comparison enterprise middleware management, database management, and dynamic web programming
  24. 24. Backend System Support Requirements • e-business needs to continuous change in its processes and expertise to cope up with changing technology and customer needs • It is crucial to be well-acquainted with the web technology and keep track of new web developments • An e-business should possess enterprise computing and a solitary, completely integrated information and communication system, which needs infrastructure / platform / framework at the back-end that is flexible enough to alter
  25. 25. E-business Framework Characteristics An e-business framework needs to possess characteristics such as – - Security - Flexibility - Scalability - Availability - Adaptability - Manageability - Maintainability - Assurance - Inter-operability - Load balancing - Fault Tolerant Systems
  26. 26. Internet—Technology Background • Allows computers to connect to cell phones, cell phones to broadband Internet or wireless Internet etc. • Build with web services, peer-to-peer applications, grid computing, etc. • A broad understanding of WWW architecture and Internet technologies is very essential for developing e-business applications in order to run the business successfully.
  27. 27. The Internet • An interconnected network of thousands of networks, which are made up of millions of computers • Consists of different types of networks, physically separate and connected only at particular points • Every network connecting to Internet should follow a set of communication protocols known as Internet protocols • Every network consists of nodes and channels
  28. 28. Internet Protocol • A protocol is a set of rules and standards to be adopted by a system for data transmission on the network • Internet protocol is a set of rules and techniques that are used to transmit data between nodes over the Internet • Data are transmitted across the packet switched network using TCP/IP, which is also known as an Internet Protocol Suite (IPS) • These protocols are based on the OSI/ISO
  29. 29. OSI / ISO Layer
  30. 30. TCP/IP Protocol • TCP/IP is a communication protocol developed to govern the formatting, ordering, compressing, and error evaluation of a message on the network • It specifies the speed of transmission and the means that enable network devices to indicate that the sending or receiving of a message has been completed. • TCP establishes a connection between the sender and the receiver nodes, and ensures that the packets that are transmitted by the sender
  31. 31. IP given to every node on the internet Address A unique IP address is • • An IP address comprises of a set of four numbers separated by a ‘.’ e.g. • Each number in this set is between 0 and 255 • First three sets of numbers recognize the local area network and the last number denotes a specific computer in that network • IP addresses are associated with domain name to remember it easily • The Domain Name System automatically translates the web address or the name typed by the Internet users into the corresponding numeric IP address
  32. 32. IP Address Cont.. • A Uniform Resource Locator (URL) is used by browsers to identify the location of a computer on the web • URL consists of the protocol to be used when accessing the address (e.g. HTTP), and followed by its location • Network Address Translation (NAT) allows an organization’s Intranet to use a range of IP addresses not visible outside the company’s Intranet • Sometimes, one node can have more than one IP address • Internet Protocol Version 4 (IPv4) can address four billion IP addresses. • Internet Protocol Version 6 (Ipv6) uses 128-bit addresses, which allow address space of 2128 addresses!
  33. 33. Client Server Computing Model
  34. 34. Other Internet Protocols In addition to TCP/IP, Internet protocols also include – • HTTP • FTP • SSL Few Utility Programs on internet • PING • TraCert
  35. 35. Internet Software • It is a basic software that runs on every computer / node that needs to connect to the Internet • Used mainly to implement Internet protocols • Can be independent, stand-alone software, inbuilt application software, or system software • Web browser is a commonly used software interface to exchange business information between client and server • Additional functions are implemented in routers and servers to allow routings / other processing in the network • Typical tools used to implement e-business application software include Java Script, XML, Flash, PHP, Asp.Net, c#,, etc.
  36. 36. • Network and System An appropriate network and system Administration administration has become a critical criterion of success to meet the challenges in an ebusiness. • A network / system management structure should – 1.Allow to keep track of every single component of the network centrally 2.Be able to gather the information from every part of the network quickly 3.In case of a failure, should be able to correct it
  37. 37. 5. Network and System Needs toAdministration Cont.. hardware, handle different types of software, operating systems, platforms, and network protocols 6. Be open-ended, that it should be able to add new organizations and their infrastructure into the overall infrastructure 7. Address all types of resources, such as various databases, applications, networks, systems, etc. 8. Network management and Internet business system software include OpenView by HP,
  38. 38. Security Implementation in e-businesses • Additional security measures have to be implemented in internet communication to maintain privacy, confidentiality, availability, integrity of e-businesses • Security attacks are mainly due to wrongly constructed software, human errors, or missing processes • Number of technologies are available to ensure information security, such as – • A firewall
  39. 39. • Database Management Systems and Database on the web server canProgramming Dynamic Web offer e-business websites a powerful mechanism to store and retrieve database from anywhere • Database can consist of products and services that are provided by an e-business or a client’s data input through the website • Dynamic websites utilize data stored on the web server • Database management system for implementing dynamic websites should possess the following characteristics • It should be a multiuser DBMS. • It should help in supporting a distributed, concurrent environment. • It should be secure
  40. 40. Design and Development of a Business Website
  41. 41. Learning Objectives • • • • • • To understand – Importance of planning a site, its contents and designing attractive as well as effective business websites Issues and steps involved in building and launching an ebusiness website Role of ISP in hosting and maintaining the websites e-business solutions available in the market and the selection criterions that best suit the business req.s Security issues involved in websites Website traffic tracking and analysing how it helps to take better business decisions
  42. 42. Introduction • Innovations in the business operations to improve the services to be provided to the customers • Continuous updations in business processes to meet the needs of changing technology • Success or the failure of an e-business depends on lots of technical factors • To start a business, what is needed is high quality, innovative products / services to offer, innovative internet marketing strategies by taking advantage of the state of the art technological advancements
  43. 43. Issues involved in designing a website • A presence of an organization on the Web can be established through its website • The website is known as the ‘visiting card’ of the company in cyberspace • Websites becoming more and more secure places to do business and commerce, with technological advances • Designing a business website has to be handled very professionally to attract valuable customers and retain them
  44. 44. In house Website Design • In-house website design and development has to observe few customs to utilize advantage of having a business website • Hire best personnel • Maintain the balance between aesthetics and technology in business websites • Take care of the following aspects as - Ease of navigation, optimal use of graphics and multimedia, page loading time, memory usage / requirements, facilities provided on the website, security issues, ease of purchasing, and ease of payment
  45. 45. In House Design of Website • Organization needs to buy/own a complete set of website designing tools, such as HTML editors, image and graphics software, scanners, and so on • A readymade software can also be used to readily build ecommerce enabled websites • There can be a few limitations to use such solutions – All the websites created with such templates may look and work on similar lines – They may lose that special and unique touch of the company – The level of customization is always limited with such ready-made tools
  46. 46. Steps Involved in Website Development The complete procedure of getting ready the website for a self-owned e-business can be viewed as a sequence of five steps. • Plan the website, select/ finalize the domain name, register it • Design the business website • Finalize ISP and host the website • Test it thoroughly • Promote it and maintain it
  47. 47. Deciding the Website Contents • Most important step in planning for a business website • Planning the contents should mostly depend on – – What the customers are interested in – What the value added services are that should be focused upon – What the objective behind starting the e-business – Type of website and so on • Website contents can be primary and secondary contents • Interesting contents, attractive graphics, multimedia, news, statistics attract customers as well as retain them
  48. 48. Website Contents • Website contents should satisfy few requirements, as– the language used should be easy–to-understand – contents should not be lengthy and verbose – multiple language facilities should be provided – Genuine, well-written contents can help the search engines to locate the website quickly • Business website contents can be categorized as – Informative Contents – Interactive Contents – Multimedia Contents, and – Software Contents
  49. 49. Informative Contents • Informative contents can be further classified as – – – – – – – – – – Product description Images of the products Graphs & Statistics FAQs (frequently asked questions) News Reviews Newsletter Guest columns Database etc.
  50. 50. Interactive contents • Interactive contents are top-ups, based on the basic contents of a website • Interactive contents include – – – – – – Chat rooms Message boards Contests Polls Web boards etc.
  51. 51. Multimedia Contents • Multimedia makes websites colourful & interesting • Allows in conveying dynamic and interactive contents to the customers • A very effective means of advertising a business • The only care that is needed is to check the memory and bandwidth requirements to view these files • It includes a variety of media contents that are used together, such as – – Audio - Video – 3-D graphics - Animation – Flash media components
  52. 52. Software Contents • Software contents include software programs which can be downloaded from the site • It may include the demos or restricted version of the software products and give the customers a chance to try the product without actually buying it • Few free types of software can also be made available for downloading • These include screen savers, wall papers, etc.
  53. 53. Website Contents Guidelines The contents on the website • Can be made informative by creatively arranging for the contents • Should be arranged so that the most important / frequently needed information can be made available with one-two key strokes • Should be relevant, accurate, licensed, knowledgeable & innovative • Should be updated regularly to avoid invalid data on the website • Generally, the most neglected areas are in the upper left corner and the lower right corner. The best website contents should be placed by keeping such points in mind • Should maintain a balance between the interest of the business and the interest of the customers as well as information content and entertainment content
  54. 54. Designing the Business Website • With a clear vision & a solid plan in hand, the task of designing an e-business website can be started. • There are two ways to design a business website – – Designed with the in-house designing team – Outsource to some web designing company • A large number of free and paid software solutions available in the market • They solutions offer an easy way to build, maintain and promote the websites quickly and easily without actually writing any code
  55. 55. Internet Service Provider (ISP) • A company / organization that provides Internet connection to its customers • Connections can be dial up, cable Internet, broadband, Wi-Fi, etc. OR dedicated high-speed internet leased line connections, Integrated Services Digital Network (ISDN), DSL, etc. • Provides space on the web server, allows to use server software, high-speed Internet connection and other ebusiness features • Upstream ISP have a larger network & provides access to the typical ISPs
  56. 56. Internet Service Provider (ISP) Cont.. • To finalize among various ISPs, one can compare against the facilities they provide – – – – – – – Email Accounts Auto Responding Service FTP or telnet Facility Mailing Lists Secure server Web statistics
  57. 57. Internet Service Provider (ISP) Cont.. • Few criterions against which one can select the most suitable ISP can be – – network topology, technology, connection speed – site availability, shared or dedicated server – future needs of storage space on the server – email accounts with the same extensions as that of the domain names – technical staff, organization, range of services, unrestricted site updates or time taken for site updates – round-the-clock support, guaranteed availability, cost calculations, security means supported, etc.
  58. 58. Testing the Website • Websites needs to be tested thoroughly, rigorously, and exhaustively • A checklist to test the website before launching – Check whether everything on the site works/loads properly. – Check that downloading from every link has no problem. – Read page by page and go through the entire content. – Check images, graphics are placed / displaying correctly – One / many items can be successfully ordered using the shopping cart – Check whether payments can be done successfully and can receive the acknowledgement
  59. 59. Testing the Website Cont.. – Check for the loading time of the website with various types of slow / fast connections – Check all this on different computers, and even check for various computer configurations – Check feedbacks / reviews links working properly or not – Whether anybody is able to write, and add to them – Everything is working in its predefined way, even if is being used many a times sequentially – The website has to be tested again and again,
  60. 60. Promote the Website • Its an essential task of marketing to spread about the business website among the people interested in the products / services • A fully built and thoroughly tested website has to be added to various search engines, directories, and guest books • Use various marketing and advertising schemes to promote the website • Needs to be maintained frequently and regularly to ensure proper functioning of the business
  61. 61. Maintaining the Website • To maintain the proper functioning of the business website – – Frequently visit the website and test it as if testing a newly designed website – Check all the links and sub-links to ensure that no link is broken – Remove all outdated information as well as products – Maintain and update news, newsletters, reviews, and feedbacks
  62. 62. Maintaining the Website Cont.. – Change the overall look/display of the site once in a while. It gives a different view to the visitor – Stay informed about the new social networks arriving; and try to get registered there to check for the latest happenings and accordingly make arrangements on the website – Check for the good quality traffic to the website, and accordingly decide about the marketing strategies
  63. 63. e-business Solutions E-business solutions are web applications which helps – • Enable the business organizations to start and operate all their business as well as monetary transactions online, using the Internet or internal network • Quick start-up of an e-business • Overall operation of the supply chain • Operating the database centrally and analysing it to take better business decisions • Thus reaching to a wider customer base and improve success rate of the business
  64. 64. Advantages of using an e-business solution – Easy to use, easy to later upgrade, content wise or technically, as and when needed – Provide the tools that help to customize as per individual needs – Payment processing tools helps in accepting various payment modes such as credit cards, debit cards, online banking etc. – Facilities, such as customer-of-the-day, etc., can be implemented easily driving more customer traffic to the online shop – Measuring website traffic and other tracking capabilities help measuring and analysing the success of
  65. 65. Selection of Suitable e-business Solution Solutions available are categorized into two categories – 1. Solutions for small/medium-sized businesses 2. Solutions for larger/high end businesses While choosing an e-business solution, certain aspects can be considered as i. Estimated size of the organization ii. Allocated budget for the next few months iii.Estimated sales volume of the business Cont..
  66. 66. Selection of Suitable e-business Solution Cont.. iv. The number and variety of products on sale v. The set of features to be incorporated, such as shopping cart, payment accepting options, guest columns, newsletters, etc. vi. Back end office integration, database integration vii. Frequency of updating the website viii.Multi-language/multiple currency support needed or not ix. Capability to interface with other organizations, such as suppliers, financial institutes, customers, etc. x. Scalability against product range and sales volume
  67. 67. Security Issues Involved in Websites Few important practices which help in keeping the business website away from electronic crimes • Follow the fundamental security practices, such as assigning user name / passwords to the regular customers • Apply encryption to transmit every private and important data • Insist upon security on every aspect of establishing e-business and convey that to the technology partners too • Educate the customers regarding how to use the websites securely for protection • Add questions and answers regarding security issues in the FAQ section of the website • Always remain fully aware of Internet security issues, solutions available, and take advantage of them
  68. 68. Analysing the Website Traffic • Visitors to a business website are the key to the success of the business • User preferences that are used while surfing the internet can help in understanding the behavioural pattern of the site visitors • Managing, analysing and cautious monitoring this data in the right way significantly improve further traffic to the website, revenues • It can also help in getting an edge over its competitors • Web traffic analysis software can be used which can access the logs and create various reports