Page 26 - E-Bussiness and E-Commerce Management Strategy, Implementation, and Practice

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Chapter 5 E-business strategy 325
Activity To test students’
Exercises Self-assessment questions
understanding of key topics. 1 2 What are the key characteristics of an e-business strategy model?
Select a retailer or manufacturer of your choice and describe what the main
elements of its situation analysis should comprise.
3 For the same retailer or manufacturer suggest different methods and metrics for
defining e-business objectives.
4 For the same retailer or manufacturer assess different strategic options to adopt for
e-business.
Essay,Discussion and Essay and discussion questions
Chapter 2 E-commerce fundamentals 85 1 Evaluate the range of restructuring options for an existing ‘bricks-and-mortar’
organization to move to ‘bricks-and-clicks’ or ‘clicks-only’ contributing a higher
Examination questions online revenue.
Activity 2.4 Revenue models at e-business portals 2 Explain the main strategy definition options or decisions available to an organiz-
ation intending to become an e-business.
Purpose 3 Between 1994 and 1999 Amazon lost more than $500m, but at the end of this
To illustrate the range of revenue-generating opportunities for an online publisher. These provide period its valuation was still more than $20bn. At the start of 2000 Amazon.com
This site looks at three alternative approaches for publishing, referencing three
visit the underwent its first round of job cuts, sacking 150 staff or 2 per cent of its world-
www different types of portal. wide workforce. Later in 2000 its valuation dropped to less than half.
Question engaging activities for Write an essay on the strategy of Amazon.com exploring its history, different
Visit each of the sites in this category. You should: criteria for success and its future. See the Wired Magazine archive for profiles of
Amazon (www.wired.com).
1 Summarize the revenue models which are used for each site by looking at the
information for advertisers and affiliates. 4 Analyse the reasons for the failure of the original boo.com. Research and assess
2 What are the advantages and disadvantages of the different revenue models for the students and lecturers the sustainability of the new boo.com business model.
site audience and the site owner? 5 What can existing businesses learn from the business approaches of the dot-com
3 Given an equivalent audience, which of these sites do you think would generate organizations?
the most revenue? You could develop a simple spreadsheet model based on the in and out of the 6 What are the similarities and differences between the concepts of business
following figures: process re-engineering (BPR) and e-business? Will the e-business concept face
• Monthly site visitors: 100,000, 0.5% of these visitors click through to affiliate sites the same fate as BPR?
where 2% go on to buy business reports or services at an average order value
of €100; 7 Discuss this statement by David Weymouth, Barclays Bank chief information officer
• Monthly page views: 1,000,000, average of three ads displayed for different classroom. (Simons, 2000b):
advertisers at €20 CPM (we are assuming all ad inventory is sold, which is rarely There is no merit in becoming a dot-com business. Within five years successful
true in reality); businesses will have embraced and deployed at real-scale across the whole enter-
• Subscribers to weekly newsletter: 50,000. Each newsletter broadcast four times prise, the processes and technologies that we now know as dot-com.
per month has four advertisers each paying at a rate of €10 CPM. 8 Compare and contrast different approaches to developing e-business strategy.
Note: These are not actual figures for any of these sites.
The sites are: Examination questions
Econsultancy (www.econsultancy.com), Figure 2.16. 1 Define the main elements of an e-business strategy.
Marketing Sherpa (www.marketingsherpa.com).
2 You are the incumbent e-business manager for a domestic airline. What process
would you use to create objectives for the organization? Suggest three typical
objectives and how you would measure them.
3 Explain the productivity paradox and its implications for managers.
4 What choices do executives have for the scope and timeframe of implementing
e-business?
Figure 2.16 Econsultancy (www.econsultancy.com)
Answers to activities can be found at www.pearsoned.co.uk/chaffey
Real-world E-Business 196 Part 1 Introduction
Real-world E-Business experiences The Econsultancy interview
experiences Interviews with Interview with Mike Clark of GD Worldwide, supplier to the social net-
work bands
industry leaders in the Overview and main concepts covered
GD Worldwide is an online resource for independent bands originating in Australia. It is
intended to help establish an Internet presence and manage the distribution of their
e-commerce world to give material. It also allows bands to create a ‘backstage area’ via its Usync tool. It high-
lights the innovation made possible by digital technology and how one web start-up
business has taken advantage of them. We caught up with UK MD Mark Clark to
discuss plans and progress to date...
personal insight to students. Q. When, how and why was the company formed?
Mike Clark, GD Worldwide: The company is called GD Worldwide, and was formed in
2001 by the Australian band Gabriel’s Day – a touring, working band. They’re relatively
small in the global scale of artists, but in Australia have got a core following and a
sustainable fan base.
The music business in Australia has, to an extent, been overlooked by the big record
labels, at least relative to other markets, so it has spawned more of an independent, self-
managed environment. The artists have much more of a sense of community about them.
So the idea behind GD Worldwide was to take the experiences of Gabriel’s Day and
give other artists the tools they need to create self-sustaining careers outside of the
traditional, major label system. It gives them an alternative route to market – they don’t
have to go through the existing model.
In that model, the creative group behind a band have to go through a series of gate-
keepers in order to reach their audience – the distribution, the rights organizations, the
Student Companion retailers and so on.
There’s a whole load of people that get in between the artist and the audience and
are taking meat off the table. Those people aren’t really adding a tremendous amount
of value – they are normally taking it away – so the artists find it difficult to reach their
Website Multiple choice audience in a sustainable way.
The other side of it is that the gatekeeper model only represents what we estimate
to be 3% of the total music marketplace. It’s the short tail and the market is set up to
create and feed that, rather like the Hollywood star model. There is the other 97% of
questions, video the market – the long tail, and we are a company set up to operate there. We put the
artist at the centre of things and reorientate the resources around them.
The other thing is that it’s no secret that record sales are declining, and while the
music is predicting that there is huge growth to be had in the future, nobody seems to
material, online glossary know how to get their hands on it.
Q. What do you offer over the likes of Bebo and Myspace?
and flashcards to aid Mike Clark, GD Worldwide: In Myspace, there are up to 3m artists but very few have
worked out how to monetise their presence or commercialise the interest they
have created.
We think of our Usync product as the next step on from Myspace, where an artist
can interact, manage and learn from their audiences, as well as commercialising them.
learning and studying. have brought people into your space, how many of those are true fans? You want to
Bands need a Myspace profile – it’s a great way to attract interest – but once you
take the 20% of those that are, and bring them into the backstage area we create for
you, where they get treated to exclusive content and so on.
Chapter 3 E-business infrastructure 115
Case Study Integrated
In their blog posting Google engineers explain:
Google downloads the web continuously, collecting updated page information and re-
processing the entire web-link graph several times per day. This graph of one trillion URLs
is similar to a map made up of one trillion intersections. So multiple times every day, we
do the computational equivalent of fully exploring every intersection of every road in the throughout the text with
United States. Except it’d be a map about 50,000 times as big as the US, with 50,000
times as many roads and intersections.
Google no longer publishes the number of pages indexed on its home page, perhaps due to many taken from the
accusations that it is ‘evil big brother’; however, it is generally reckoned to exceed 10 billion.
Financial Times, illustrating
Case Study 3.1 Innovation at Google
Context Google Image Search current examples of
Google Book Search
In addition to being the largest search engine on planet Google Scholar
Earth, mediating the searches of tens of billions of Google Base. Lets content owners submit content
searches daily, Google is an innovator. All online
marketers should follow Google to see the latest that they want to share on Google web sites. e-commerce and its
approaches it is trialling. Google Webmaster Tools. Provides information to
webmasters to help them enhance their understanding
Google’s Mission of how their web sites interact with the Google search
engine. Content owners can submit sitemaps and applications.
Google’s mission is encapsulated in the statement ‘to geotargeting information through Google Webmaster
organize the world’s information ... and make it univer- Tools to improve search quality.
sally accessible and useful’. Google explains that it Google Co-op and Custom Search. Tailored version
believes that the most effective, and ultimately the most of the search engine.
profitable, way to accomplish its mission is to put the
Google Video and YouTube
needs of its users first. Offering a high-quality user
experience has led to strong word-of-mouth promotion Google Docs. Edit documents, spreadsheets, and
and strong traffic growth. presentations from anywhere using a browser.
Putting users first is reflected in three key commit- Google Calendar
ments illustrated in the Google SEC filing: Gmail
Google Reader. Google Reader is a free service that
1 We will do our best to provide the most relevant lets users subscribe to feeds and receive updates from
and useful search results possible, independent of multiple web sites in a single interface. Google Reader
financial incentives. Our search results will be also allows users to share content with others, and
objective and we will not accept payment for inclu- function with many types of media and reading-styles.
sion or ranking in them.
Orkut – a social network
2 We will do our best to provide the most relevant Blogger. Blogger is a web-based publishing tool that
and useful advertising. Advertisements should not lets web users publish blogs.
be an annoying interruption. If any element on a Google Desktop. Search own local content.
search result page is influenced by payment to us, Picasa. Picasa is a free service that allows users to
we will make it clear to our users. view, manage and share their photos.
Google GEO – Google Maps, Earth and Local
3 We will never stop working to improve our user Google Checkout provides a single login for buying
experience, our search technology and other
important areas of information organization. online. On 1 February 2008, Google began charging
merchants who use Google Checkout 2% of the
The range of Google services is well known: transaction amount plus $0.20 per transaction to the
Google Web Search extent these fees exceed 10 times the amount they
spend on AdWords advertising.
Movie, Music and Weather Information
News, Finance, Maps, Image, Book and Groups Google Mobile, Maps, Mobile, Blogger and Gmail are
Information all available on mobile devices.