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Monday, April 2, 2012

e-business paper

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Introduction


The incredible growth of the Internet and connectivity to the Internet by individuals and businesses alike has brought many opportunities to generate new industries and new efficiencies within businesses and between businesses. These opportunities can be seen in the different e-business models that are currently providing benefits to organizations. A business model embodies a plan or offering a value proposition to customers, a source of revenues, an identification of costs, and a detailed set of processes for execution.


According to Kador (000), the digital economy is driving the creation of five business models from which every e-business must select. Every successful Internet-ready organization takes on one or more of these models. Whether they occupy a Business-to-Consumer (BC), Business-to-Business (BB), or Consumer-to-Consumer (CC) environment, every e-business must develop competencies in one or more of these models e-business storefronts, infomediary, trust intermediary, e-business enabler, and infrastructure provider.


E-Business Storefront


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E-business storefronts are the online analog to traditional ways of selling products or services. E-business storefronts like Intel, Amazon, ETrade, Cisco, and Dell offer to their target audiences, niche markets and buyers, products, product offering, order taking, services, fulfillment, customer service, and support, and content, information on products and services. Their goal is to dominate and target niche markets. Further, their revenue streams are product, service margin and advertising.


Infomediary


Infomediary is defined as an entity that brokers content, information, knowledge, or experiences that add value to a particular e-business transaction. Infomediaries like NetBuy, Autobytel, Eloan, and Travelocity generally do not buy or sell anything, but rather facilitate transactions by providing aggregation services. Their target audiences are members of a virtual community, members of a value chain, or part of an industry’s value chain and market sector.


Trust Intermediary


Trust intermediaries like Verisign and CyberCash provide a secure environment in which buyers and sellers can confidently exchange values. Their revenue streams are licensing fee and subscriptions, and their goal is to extract value from each transaction by enabling a safe, secure transaction environment.


E-Business Enabler


For e-business enablers like Federal Express, LoopNet, and Chrome.com, the target audiences are E-business storefronts and Infomediaries. E-business enablers create and maintain an infrastructure in which product and service providers can conduct transactions reliably and securely.


Infrastructure Provider


Infrastructure providers or communities of commerce like The Sabre Group, GE TPN, Active Wear Online (Fruit of the Loom) create environments for exchanging value in which participants with common interests can interact. Their revenue streams are advertising, subscription fee, partnership fee, and percentage of transactions.


Taking on one or more of the five extended e-business models creates e-business value. These models are not mutually exclusive. The most successful Internet-ready enterprises take on multiple business models concurrently. The facts support the conclusion that enterprises that have taken on multiple roles and manage them well have a dramatic advantage in the e-business.


Conversely, Robinson (00) states that on an individual basis, each e-business model is unique in the same sense that each business plan is unique to a particular company or application because the factors and influences that go into planning for each organization is never exactly the same. However this does not mean common linkages cannot be drawn from differing business models. In general terms e-business models can be broadly grouped into different categories, which are Business to Consumer Models (BC), Business-to-Business Models (BB), and Consumer-to-Consumer Models (CC).


Business-to-Consumer Models


Business-to-Consumer (BC) is well established by the existing, and increasingly automated web sites on the Internet. Many of the small, medium enterprises and large US companies have a web site that promotes their wares. Some provide for online ordering, most likely using credit cards.


In BC, business models are often categorized by the way that revenues are generated. For instance, subscription models charge a monthly or annual subscription fee for the service; transaction-fee models charge a service fee based on the level of transactions offered; advertising-supported models charge to the advertising companies; and sponsorship models are a supplementary source of income.


Another perspective of classifying BC models is the type of sites that sell directly to consumers. For example, direct marketing sites from manufacturers such as Dell, Nike, and Amazon.com; traditional retailers with Web sites, which are called brick-and-mortar retailers, such as Wal-Mart or Home Depot.


BC can also be classified by the scope of handling items, general purpose versus specialty or niche e-tailing and scope of covering region, global versus regional.


Business-to-Business Models (BB)


Business-to-Business Models (BB) reflects the interaction between manufacturers and suppliers. It should be duly noted that the BB models may include each of the above BC business models i.e. manufactures may come together to buy products and services, which in turn are aggregated or are further developed prior to selling to the end user or consumer. One entities client may be another entities supplier.


Where BB and BC depart ways is in the development of e-business models that focus on generating benefits and savings in the tighter integration of suppliers and manufactures in addition to technology based business improvements between the parties. This tighter integration is reflected in the development of business models that propose alliances with not only suppliers and manufactures but also competitors.


There can be many different types of BB and they all take place online in what is known as trading exchanges, portals, e-Marketplaces, trading hubs, BB portals or just marketplaces. Some examples are


·A company that wants to buy supplies can place an online order and wait for a number of companies to bid over the Internet. The buying company then chooses the most competitive bid


· A supplier with excess inventory offers those goods on the Web and wait for companies to bid for them. In this way, the company can auction them off to the highest bidder


·Dynamic pricing, where prices change as buyers and sellers interact over the Internet and companies will begin to choose the most competitive trading partners in price or terms offered


·Auction, where many buyers bid on products for sale. This can be hosted by the seller or by a neutral intermediary


· Reverse auction, where large buyer solicits bids or posts requests for proposals (RFPs) online.


Consumer-to-Consumer Models


Consumer-to-Consumer Models (CC) reflects the interaction between manufacturers and suppliers. These models are represented by entities such as E-Bay, and 4salebyU.com. These sites offer the consumer a way to buy or sell goods and services directly to or from other consumers. Like BC models, they offer their services by providing for online ordering, generally using credit cards or Pay Pal. CC like BB sites also offer shopping carts, search engines, and sometimes membership on the web site. Where these models differ is there is no middleman, i.e. a company, which would include such things as taxes, i.e. sales tax. Generally the types of sites advertise on the Internet or through television and radio ads.


Internal Cost Reduction


Some of the features of business models focus a cost reduction and saving strategies for the internal operations of the organization, as opposed to being customer focused. For example we have the impact of business models that focus on the implementation of new technologies resulting in the change of


management style and organizational structures. As a result of implementing new business models we have seen an increasing trend to the flatting of organizational and management structures.


Conclusion


It can be seen that there is a diverse range of different e-business models that can be interlinked to provide benefits to the organization. These models are not isolated from one another and the features of one can be combined with another to reach the objective of the organization. Further, these models share common functions, features, and marketing practices. These models mostly all utilize features such as customer service, search engines, and shopping carts. These sites also use the Internet to market themselves, i.e. pop-ups, or links from other sites. Furthermore, these models offer benefits to the company and consumer through cost savings from things such as rent, overhead, and inventory storage. They allow the company or consumer to go directly to the source in most instances saving time and money not having to physically go to the storefront.





References


Turban, E., King, D., Lee, J., Warkentin, M., and Chung, M. (00) E-Business, Principles and Practices [University of Phoenix Custom Edition e-text]. Upper Saddle River, NJ Prentice-Hall, Inc.


“The scale of the opportunity.” (June 1) TOPXLM, Doing business in the future, now. Retrieved September 0, 00 from EBSCOhost Direct Database on the World Wide http//www.apollolibrary.com/collections.asp


Robinson, T. (00). Types of E-business Models. Retrieved September 0,00 from EBSCOhost Direct Database on the World Wide http//www.apollolibrary.com/collections.asp


Kador, J. (000). Wired for business, five successful e-business models. EAI Journal, Cover story, July/August 000. Retrieved September 0, 00 from EBSCOhost Direct Database on the World Wide http//www.apollolibrary.com/collections.asp





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