Week 3 Ie 2033


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Week 3 Ie 2033

  1. 1. CHAPTER 3 <ul><li>COMPETITIVE LANDSCAPE-CHANGING PROPERTIES OF THE INTERNET </li></ul><ul><li>This chapter answers the question; </li></ul><ul><li>What makes the Internet a better technology? </li></ul><ul><li>Does it have potential to transform competitive landscape? </li></ul><ul><li>Look at properties of the Internet that have the potential to influence business models & industry profitability. </li></ul>
  2. 2. PROPERTIES OF THE INTERNET <ul><li>Mediating Technology </li></ul><ul><li>Universality </li></ul><ul><li>Network Externalities </li></ul><ul><li>Distribution Channel </li></ul><ul><li>Time Moderator </li></ul><ul><li>Information Asymmetry Shrinker </li></ul><ul><li>Infinite Virtual Capacity </li></ul><ul><li>Low Cost Standard </li></ul><ul><li>Creative Destroyer </li></ul><ul><li>Transaction Cost Reducer </li></ul>
  3. 3. Interactive Activity <ul><li>Which industries stand to benefit the most from the Internet? </li></ul><ul><li>Which activities (business processes/activities) are least likely to be impacted by the Internet? </li></ul>
  4. 4. wiki <ul><li>Industry- </li></ul><ul><li>…… the people or companies engaged in a particular kind of commercial enterprise </li></ul><ul><li>…… the organized action of making of goods and services for sale; </li></ul>
  5. 5. 1. MEDIATING TECHNOLOGY <ul><li>Interconnects parties that are interdependent or want to be </li></ul><ul><li>Can be B2B,B2C or C2B </li></ul><ul><li>It facilitates exchange relationships among parties distributed in time & space. </li></ul>To succeed in finding a solution.
  6. 6. 2. UNIVERSALITY <ul><li>Refers to the Internet's ability to both large & shrink world. Anyone can sell anything anywhere thro Internet service can be retrieve across the globe. E.g. software developer's services & experiences. </li></ul>
  7. 7. 3. Network Externalities <ul><li>As more people take advantage of the Internet the more it became useful. </li></ul><ul><li>Phone example, Kazaa file sharing, bit torrent </li></ul><ul><li>(Bob Metcalfe) Metcalfe’s Law: N </li></ul><ul><li>“ The value of a network increases as the square of the number of people in the network” </li></ul>N
  8. 8. 4. DISTRIBUTION CHANNEL <ul><li>Acts as a distribution channel for products that are largely information-bits (0110100) </li></ul><ul><li>Replacement effect of the internet that the internet serves using the old distribution channel </li></ul>
  9. 9. Replacement effect &extension effect <ul><li>Replacement effect-book example </li></ul><ul><li>Extension effect- brokerage online </li></ul>
  10. 10. 5. TIME MODERATOR <ul><li>Ability to shrink & enlarge time </li></ul><ul><li>Shrinks time for potential customers to find information on buying cars </li></ul><ul><li>Enlarge time by for example: work on a software program that starts in japan and sends it o US to finish it off and sends back to Japan </li></ul>
  11. 11. Work starts here. Software development Extend development here.
  12. 12. 6. INFORMATION ASYMMETRY SHRINKER <ul><li>Exist when one party to a transaction has information that another party does not </li></ul><ul><li>E.g source of advantage of a car dealer,car dealers always knew the cost of the car but the customers don’t </li></ul><ul><li>Therefore the web offers information to the customer </li></ul>
  13. 14. 7. INFINITE VIRTUAL CAPACITY <ul><li>Technological advances that improve storage & network technologies </li></ul><ul><li>Similar to Moore’s Law. </li></ul>
  14. 16. 8. LOW COST STANDARD <ul><li>Internet are open standards and very easy to use. Information is transmitted & received using the same protocol. </li></ul><ul><li>Cost is very low, the remaining cost are shared among millions of user since it is a standard </li></ul>
  15. 19. 9. CREATIVE DESTROYER <ul><li>The Internet is a low cost standard printing press of sorts and a distribution network with unlimited capacity .It tears down large part of the barriers to entry that exist it that industry </li></ul><ul><li>Creative destruction of the newspaper industry. </li></ul>
  16. 20. newspaper <ul><li>High cost </li></ul><ul><li>Printing </li></ul><ul><li>Distribution network </li></ul><ul><li>Brand names. </li></ul>$$$$
  17. 22. 10. TRANSACTION-COST REDUCER <ul><li>Cost of searching for sellers & buyers, collecting information on products, negotiating, writing, monitoring & enforcing contracts. All this activities cost money. </li></ul><ul><li>It reduces the cost by providing information on buyers & sellers & products on the Web. </li></ul><ul><li>Some products can be ‘shipped’ over the web e.g. software, music, videos, ect. thus reduces transportation cost. </li></ul>
  18. 24. NEXT WEEK PART2 <ul><li>Quiz #2 due next week 1 week from today. </li></ul><ul><li>7-8 page min. </li></ul><ul><li>Tutorial??? </li></ul><ul><li>How to write a good paper. </li></ul>
  19. 25. IMPACT OF THE INTERNET ON THE 5-Cs <ul><li>The ability to envision & delivering value to customers require the performance of many activities that rest on information exchange. 5 activities are; </li></ul><ul><ul><li>Coordination </li></ul></ul><ul><ul><li>Commerce </li></ul></ul><ul><ul><li>Community </li></ul></ul><ul><ul><li>Content </li></ul></ul><ul><ul><li>Communication </li></ul></ul><ul><ul><li>The 5-Cs </li></ul></ul>
  20. 26. 1. Coordination <ul><li>Ensure that each subtask is performed. </li></ul><ul><li>Sharing of information is done constantly </li></ul><ul><li>Resources are shared accordingly to perform task </li></ul><ul><li>E.g. task T requires the performance & coordination of subtask A , B & C . </li></ul><ul><li>Development of Pentium III , design & building of Boeing 777 </li></ul>
  21. 27. 2. Commerce <ul><li>Performing commerce over the internet has low cost standards & universality standards </li></ul><ul><li>Potential customers all around the world </li></ul><ul><li>Types of e-commerce </li></ul><ul><ul><li>B2B </li></ul></ul><ul><ul><li>B2C </li></ul></ul><ul><ul><li>C2C </li></ul></ul><ul><ul><li>C2B </li></ul></ul>
  22. 28. 3. Community <ul><li>Electric community have many advantages over physical communities </li></ul><ul><li>Virtual community can congregate online through chat rooms & message boards </li></ul><ul><li>The advantage of universality & low cost standard properties-anyone from anywhere can join the group </li></ul><ul><li>‘ Time moderator effect’ states that group do not have to meet at the same time </li></ul>
  23. 29. 4. Content <ul><li>Information, entertainment & other products that are delivered over the Internet </li></ul><ul><li>Entertainment-Disney online, MTV online, interactive video games,& sport casting </li></ul><ul><li>Information-current news, stock quotation, weather forecast, & investment information. </li></ul>
  24. 30. 5. Communication <ul><li>Beyond all the other C’s the heart of it –communication </li></ul><ul><li>E-mail, web phones, real-time video, ect. </li></ul><ul><li>Every user has the capability to broadcast message. </li></ul>
  25. 31. LIMITATIONS TO TRANSACTIONS OVER THE WEB <ul><li>Internet is Information Technology </li></ul><ul><li>Information sent over internet encoded into one’s & zero’s 100101110. </li></ul><ul><li>Soon the information sent over the Internet must be handled by people. </li></ul><ul><li>This will cause limitation on conducting business </li></ul><ul><ul><li>Tacit Knowledge </li></ul></ul><ul><ul><li>People </li></ul></ul>
  26. 32. Tacit Knowledge <ul><li>Knowledge is tacit if un coded & non verbalized </li></ul><ul><li>Tacit knowledge on which transaction rest cannot be encoded into a form that can be put onto the internet & transmitted. </li></ul>
  27. 33. People <ul><li>Transactions over the Internet are limited by humans & their organization. </li></ul><ul><li>Individuals & organizations are limited because they may not be able to encode knowledge into a form that can be transmitted over the Internet-the receiving end may not understand it. </li></ul><ul><li>Difficult to perform transaction over the Internet, maybe virtual reality can help. </li></ul>