The document discusses business models and strategies for internet and e-commerce firms. It describes four aspects of business models including revenue sources, cost drivers, investment size, and critical success factors. It also discusses the web strategy where firms collaborate around a technology platform. Key points of the web strategy include technological standards, increasing returns, and different strategic roles firms can play as shapers or adapters. Revenue sources for internet businesses are also summarized including advertising, subscriptions, affiliate marketing, and selling data.

1. NEW BUSINESS MODEL & STRATEGY
FOR INTERNET ECONOMY
1

2. Business Model
 A business model describes what a firm
will do, and how, to build and capture
wealth for stakeholders
 It is a plan for the successful operation
of a business, identifying sources of
revenue, the intended customer base,
products, and details of financing.
 Effective business models operationalize
good strategies - turning position and fit
into wealth
2

3. Four Aspects of Business Models
 Revenue Sources
 Cost Drivers
 Investment Size
 Critical Success Factors
3

4. Effective Business Models Require
Hard Choices
 About who matters
 Owners, investors, family, workers,
community
 About what kind of wealth matters
 Financial capital, social capital,
intellectual capital...ie., cash, good life,
rich family life, entrepreneurial impact,
social impact
 About the strategy that will deliver the
wealth that matters to the stakeholders
that matter
 About the structure that supports strategy 4

5. Good Execution is More Important
than Good Strategy!
 Seeing a position or approach is
fundamentally creative
 Immersion, scenarios, future search,
 Constructing a strategy involves
careful analysis and planning
 Executing a strategy requires
relentless discipline
5

6. Business Model Template
6

7. Strategy for Internet Economy
7

8. Internet and e-commerce firms
Major groups of Internet and e-commerce
firms comprising the supply side include:
 Makers of specialized communications
components and equipment
 Providers of communications services
 Suppliers of computer components and
hardware
 Developers of specialized software
 E-commerce enterprises
8

9. 9
The Web (Cluster/Platform) Strategy
 Webs – not the WWW, but ‘clusters of
companies collaborating around a
particular technology’
 Web – a new form of industrial
structure
 Webs create powerful new ways to
think about strategy, risk, technological
uncertainty and innovation
 Examples –Microsoft/Intel; Novell PC
networking system; SAP integrated IT
solutions; Netscape; Sony playstation
etc.

10. 10
Economic Web
 Two compulsory conditions: Technological Standard
& Increasing Returns
 Tech standard – reduces risks allowing companies to
make irreversible investment decisions in face of
technological uncertainty
 Increasing Returns – create a mutual dependence
that strengthens the web by drawing in more and
more customers and producers

11. 11
Characteristics of the Web
 Webs are not alliances – no formal relationships
between participants
 Different from virtual organisations
 The Pursuit of economic self-interest drives
behaviour
 Each company independent and prices, markets; and
sells products autonomously
 Webs are natural responses to risk and uncertainty
in turbulent environment
 The safety net of the web allows a firm to focus
exclusively on activities it can offer distinctive value
 Web reduces overall investment requirements; focus
investments on areas most likely to succeed;
promote multiple suppliers for bottleneck
components

12. 12
Strategic Roles in Webs
 Shapers – Focus on fluidity and opportunities
to determine or influence outcomes; mold the
environment in ways enhancing their ability
to create values [define]
 Adapters – Deal with uncertainty by staying
one step ahead of other players in responding
to & anticipating environmental changes
 Profound implications for strategy and tactics
(e.g. Microsoft versus Dell)

13. 13
Success Factors for Shapers
 Ownership of a key platform technology – shapes
broader architecture & long-term lock-in (IBM Versus
Microsoft/Intel)
 Reliance on economic incentives to mobilise other
web participants
 Active management of increasing returns dynamics
to accelerate web growth

14. 14
Success Factors for Adapters
 Early participation in winning value webs –
establish pre-emptive position in attractive
market
 Aggressive competition for share within the
value web – strengthen relationship with
shapers for information
 Linking or diversifying position – linking
strategy with key shapers or straddle several
webs

15. 15
What is Distinctive about Web Strategy
 New mindset required – new way of thinking about
industry structure, relationships between companies
and value creation
 Unbundling and out-sourcing of undifferentiated
business activities (what about transformational
outsourcing?)
 Maximising value for entire web by shapers – not just
the company (market share vs size of pie)
 Strategic decision - webs to join/form & roles to play
 New performance measurement
 Product design satisfy customers but also appeal to
providers of complimentary products & services
 Information systems – beyond the enterprise

16. Internet Business Model
 Information Sales
 Service Sales
 Brokerage
 Advertising
 Merchant
 Manufacturer (Direct)
 Affiliate Community
 Subscription
 Utility 16

17. Economic potential of
the internet revolution
 Reducing the cost
 Manage supply chain more effectively
 Easy communication
 Increasing competition
 Making prices more transparent
 Broadening markets for buyers and sellers
 Increasing the effectiveness of marketing
and pricing
 Increasing consumer choice, convenience
and satisfaction in a variety of ways.
17

18. Revenue Sources
 Advertising
 Subscribers
 Lead Gen / Affiliate
 Selling Data
 Freemium
 Royalties
18

19. 19

20. Freemium
 Freemium is a business model, especially on the
Internet, whereby basic services are provided free of
charge while more advanced features must be paid
for.
20

21. Critical Success Factors
 Immediacy
 Proximity: Geolocation
 Communication
 Invest aggressively in R&D to win the
technological race against rivals
 Form strategic alliances to build consensus for
favoured technological approaches
 Acquire other companies with complementary
technological expertise
 Hedge firm’s bets by investing sufficient
resources in mastering one or more of the
competing technologies 21

22. Strategic drivers of the Internet
economy
 Important drivers of the Internet economy
include:
 The greatest added value for products and services of
all kinds is Information. Products and service products
are essentially at par with their competitors in relations
to a product’s features.
 Distance and size do not matter in the many types of
communications and transactions that can occur.
Whether the information is news, customer service, or
product availability, information is available all over the
world and accessible at any time.
 Flexibility and speed are of the quintessence. Flexibility
is required in everything from ways of responding to
customers and to business models.
22

23. Strategic drivers of the Internet
economy
 The key assets in Internet enterprises are people.
Innovation and creativity characterize companies
that are successful in the Internet era.
 A statement that has been part of technology
culture since Robert Metcalf, the developer of the
Ethernet is “growth in the network causes
exponential increase in value”.
 The Internet is many-to-many and not a one-to-
many network that allows marketers to deal with
customers on a one-on-one basis.
 Because markers are closer to the customer, it
allows for better forecasting through behavioral
data. What customers are doing is available to
marketers long before conventional marketing
research is collected. 23

24. Strategic drivers of the Internet
economy
 The Internet has changed the nature of transactions
in markets by shortening supply chains and making
it more efficient as cost patterns change.
Transactions and coordination costs are shrinking for
businesses and consumers are recognizing that
switching costs are low.
 Customers have power in information-rich channels.
Customers, consumers, and businesses have found
their voice on the Internet.
 An information economy is branded by choice and
plenty of abundance. Information is not uncommon
and is becoming more valuable as its consumers use
it.
24

25. Ecommerce Business
 Major Ecommerce Business
Classifications
 B2B Ecommerce
 B2C Ecommerce
 C2C Ecommerce
 C2B Ecommerce
 Government / Public
Administration Ecommerce
25
https://www.ecommerceceo.com/types-of-ecommerce-
business-models/

26. Ecommerce Business
 Types Of Ecommerce Business
Revenue Models
 Drop Shipping
 Wholesaling and Warehousing
 Private Labeling and Manufacturing
 White Labeling
 Subscription Ecommerce
26
https://www.ecommerceceo.com/types-of-ecommerce-
business-models/

27. Ecommerce Business
 Types Of Ecommerce Product
Revenue Models
 What Counts For Ecommerce
 Single Product Model
 Single Category
 Multiple Category
 Affiliate
 Hybrid [Single Category + Affiliate]
27
https://www.ecommerceceo.com/types-of-ecommerce-
business-models/