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CCT 355: E-Business Technologies

CCT 355: E-Business Technologies. Class 8: Patterns and Strategic Considerations in Business Models. Administration. Proposal/final project questions This/next week, BMG book Final project presentation (in Ignite format) Nov 28. Review. Customer Segments Value Propositions Channels

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CCT 355: E-Business Technologies

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  1. CCT 355: E-Business Technologies Class 8: Patterns and Strategic Considerations in Business Models

  2. Administration • Proposal/final project questions • This/next week, BMG book • Final project presentation (in Ignite format) Nov 28

  3. Review • Customer Segments • Value Propositions • Channels • Customer Relationships • Revenue Streams • Key Resources • Key Activities • Key Partnerships • Cost Structure

  4. Bundling/unbundling • Large organizations = multiple models of operation • Unbundling helps understand of different business models operating simultaneously • Three core business foci – innovation, customer relations, infrastructure management – can operate in synergy but they have their own structures and priorities

  5. Product Innovation • Enables early market entry • Speed to market is key • Premium products/pricing often the result, but that’s OK • Creative talent as key resource

  6. Customer Relationship Management • Acquisition of new customers expensive – aim to retain customers and keep them satisfied • High touch orientation – customer comes first orientation • Low touch – KISS – works just fine in some industries where efficiency, not emotion, is the key • Perception of quality is important – e.g., SERVQUAL and service “gaps”

  7. Infrastructure • Economies of scale to reduce fixed costs • Low unit costs as priority – transactional rationalization vs. customer relations or innovation • Cost focus – stressing standardization, predictability and efficiency • What many MBA/CMA programs stress – rationalization vs. innovation or engagement – which is why business run only by MBAs or accountants may not be successful!

  8. Long Tail Models • Mass or niche market? • Profit through volume vs. profit through higher margins and specialization • Often depends on customer segments

  9. Multi-sided platforms • Different approaches to different customer segments • E.g. Google – one model for advertisers, another for web users, another for content creators, another for software development, would be another still for hardware • Can link together – vertical integration to cross-populate platforms

  10. Example: LEGO • An example of both long-tail and multiple segments • Certainly a mass market – both in product and spinoffs (e.g., Legoland theme parks, partnerships with major cultural products) • Long tail – “hard to get” sets for adult enthusiasts (approximately 1/3 of market!) • Mass customization – LEGO DesignByMe

  11. Free • (At least one) customer segments receives services/goods for free • Advertising model a common example – e.g., broadcast TV, search engines, increasingly newspapers

  12. Freemium • Basics free, pay for more • Allows for sampling and basic use, targeting power users for cost recovery • Examples?

  13. Bait and Hook • Free/inexpensive – with a catch • “loss leader” hooks customer in and keeps them locked into product • Razor blades example – stick could be given away for free, since $$$ is in the replacement blades • Others?

  14. Open/Closed Business Systems • Internal and external talent and R&D welcome • Avoids “not invented here” issues • Open market of IP – not afraid to acquire (or steal?) if required • Often open for others to do same • Believes best in field are local already • R&D as internal process • Control of innovation process essential – prying eyes must be kept away

  15. Inside-Out/Outside-In • Inside-out – orgs main purpose is R&D, will sell, license core ideas out for commercialization • Outside-in – weak commitment to internal R&D, will acquire or partner with outside resources to innovate • Examples?

  16. Strategic forecasting • Business models must change over time • Factors that influence change include: • Key Trends • Industry Forces • Macroeconomic Forces • Market Forces

  17. Key Trends • Effect of new/emerging technologies? • Changes in regulatory frameworks? • Social, cultural, demographic changes?

  18. Industry Forces • Changes in #/size of competitors? • Threat of new entrants • Substitute products/services? • Changes in suppliers/supply chain?

  19. Macroeconomic Factors • Access to capital? • Global market conditions? • Commodity pricing for key resources? • Infrastructure issues?

  20. Market Forces • Changes in customer segments? • Changes in value propositions? • Changes in revenue/cost structures?

  21. Next week • Design and evaluation of business models

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