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Business Models for Internet-Based E-Commerce

Key Issues. Development of Business Models for Internet-based businessFrameworksEmerging market structuresFactors affecting business modelsPorter article. Four ?Layer Framework. Infrastructure Layer Applications Layer Intermediary LayerCommerce Layer. Four ?Layer Framework. Focus on Inte

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Business Models for Internet-Based E-Commerce

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    1. Business Models for Internet-Based E-Commerce B. Mahadevan Presented by: Kevin Ruane Justin Farrell Steven Perry

    2. Key Issues Development of Business Models for Internet-based business Frameworks Emerging market structures Factors affecting business models Porter article

    3. Four –Layer Framework Infrastructure Layer Applications Layer Intermediary Layer Commerce Layer

    4. Four –Layer Framework Focus on Intermediary and Commerce Layers Extensive customer interaction > more scope for unconventional business models

    5. The Emerging Market Structure Portals – attract consumers Market Makers – bring suppliers and buyers together Product/Service Providers – companies using dedicated web sites to deal directly with consumers

    6. Characteristics of Internet-based e-Commerce Applications Each structure addresses a key component in the business that is carried out over net These structures exist in both B2B and B2C segments Interdependency and over-lap exist among players.

    7. Business Models for Internet –Based e-Commerce Business model, blend of three streams Value Stream – identifies value proposition Revenue Stream – plan for assuring revenue generation Logistical Stream – issues regarding design of supply chain

    8. Value Streams in Internet-Based Business Long term viability is related to the robustness of the value stream. Buyers value – reduced product search costs & transaction costs Suppliers value – reduced customer search costs, promotion costs & transaction costs Pigsback.com

    9. Value Streams in Internet-Based Business Four possible value streams in an Internet-based business: Virtual Communities - eg Ireland2.org Dramatic Reduction in Transaction Costs Leads to reduction in prices

    10. Value Streams in Internet-Based Business Gainful Exploitation of Information Asymmetry eg Travel Industry Value-Added Market-making Process -eg eBay

    11. Revenue Streams in Internet- Based Business Increased margins over brick and mortar operations e.g. South-West Airlines, Ryanair, Easyjet Advertising e.g. Yahoo, Football365

    12. Revenue Streams in Internet- Based Business Variable Pricing Strategies e.g internet based marketing research firm Free Offerings e.g. real-player.com

    13. Logistic Streams for Internet-Based Business Dis-Intermediation: Process by which the logistical stream is shortened e.g. Banking 365 Infomediation: Storing and giving out of information to an individual web user e.g. Google,Yahoo & Alta Vista

    14. Logistic Streams for Internet-Based Business Meta Mediation: Obtaining and providing the missing link in a value chain when possible e.g. Innoverse an e-commerce infrastructure provider

    15. Choosing an Appropriate Business Model Role in the Market Structure e.g. Tesco cannot expect success of South-West & Ryanair Physical Attributes of Goods Traded soft v hard goods Personal Involvement Required in Buying/Selling Process experience v commodity goods

    16. Porter Article “Strategy and the Internet” Greater emphasis on strategy development Internet as a complement “In our quest to see how the Internet is different, we have failed to see how the Internet is the same”

    17. Mahadevan vs Porter Perspectives on Business Models Strategy Five Forces Model. Creating Sustainable Competitive Advantages

    18. Mahadevan vs Porter Flawed thinking e-commerce, e-business and e-strategy Isolating Internet operations Simplistic approaches However, if companies employ a business model, as proposed by Mahadevan, will they not have more robust techniques for competing using the Internet??

    19. Conclusion Develops a framework for business model Portals, Market Makers and Product/ Services Providers Value, Revenue and Logistics streams Both authors provide valid arguments Two extremes – integrate both aspects

    20. Critique Growth of Internet based companies “meteoric”? Easy to read and well illustrated Concepts well defined Provides clear concise alternatives for companies to develop a business plan. Table 2 – good summary

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