1. Creating a Winning E- Business Second Edition Defining Your E-Business Idea Chapter 2

2. Creating a Winning E-Business Second Edition, Chapter 2 2 Learning Objectives Identify entrepreneurial abilities Describe the entrepreneurial process Understand the factors affecting e- business success Identify ways to exploit e-business advantages

3. Creating a Winning E-Business Second Edition, Chapter 2 3 The Entrepreneur and the Entrepreneurial Process Entrepreneur –Assumes the risks of starting and operating his or her own business –Must be able to lead others –Must believe in his or her business idea –Must have the self-confidence to accomplish business goals

4. Creating a Winning E-Business Second Edition, Chapter 2 4 The Entrepreneur and the Entrepreneurial Process E-business entrepreneur examples –Jeff Bezos, Amazon.com –Pierre Omidyar, eBay –Kelby Hagar, GroceryWorks.com and Digital Witness –Jason Zasky, Failure Magazine

5. Creating a Winning E-Business Second Edition, Chapter 2 5 The Entrepreneur and the Entrepreneurial Process Entrepreneurial abilities –Leadership traits –High-energy level –Self-confidence –Organizational skills –Ability to act quickly and decisively –Independent, goal-oriented, creative, competitive

6. Creating a Winning E-Business Second Edition, Chapter 2 6 The Entrepreneur and the Entrepreneurial Process Entrepreneurial process –Stage 1: Are you an entrepreneur? Assess your entrepreneurial abilities Evaluate time and effort involved in starting/running your own business Consider the effect of the business commitment on your family life

7. Creating a Winning E-Business Second Edition, Chapter 2 7 The Entrepreneur and the Entrepreneurial Process Entrepreneurial process (continued) –Stage 2: Buy existing business or start own business?

8. Creating a Winning E-Business Second Edition, Chapter 2 8 The Entrepreneur and the Entrepreneurial Process Entrepreneurial process (continued) –Stage 3: For a new business startup you must Define the business idea Create a business plan Secure financing

9. Creating a Winning E-Business Second Edition, Chapter 2 9 The Entrepreneur and the Entrepreneurial Process Entrepreneurial process (continued) –Stage 4: Operate and grow your business

10. Creating a Winning E-Business Second Edition, Chapter 2 10 The Entrepreneur and the Entrepreneurial Process Entrepreneurial process (continued) –Stage 5: Harvest your business Continue to operate “cash cow” Go public Sell the business Liquidate the business

11. Creating a Winning E-Business Second Edition, Chapter 2 11 The Entrepreneur and the Entrepreneurial Process

12. Creating a Winning E-Business Second Edition, Chapter 2 12 And now… what really needs to happen to be an innovator! Entrepreneurship and creativity are really represented by a process! –Identify an Opportunity –Develop a Concept –Determine the Required Resources –Acquire the Necessary Resources –Implement and Manage –Harvest the Venture Source: Morris et al. Entrepreneurship & Innovation

13. Creating a Winning E-Business Second Edition, Chapter 2 13 Entrepreneurship and Business Models Frameworks Source: Morris et al. Entrepreneurship & Innovation Entrepreneurial Process The Environment The Entrepreneur The ResourcesThe Concept The Organizational Context

14. Creating a Winning E-Business Second Edition, Chapter 2 14 Entrepreneurship and Business Models How to find opportunities Source: Morris et al. Entrepreneurship & Innovation TypesMethodsSourcesDetractors Perennial  Deliberate  Search vs. Discovery  The Rules Change  Demographics Change  No Need Present  Window is not yet open Occasional  Market Pull vs.  Resource or Capacity Push  Underserved Markets  Social Trends  Strong Loyalties  High Switching Costs Multiple Causes  New customers to the market  Satisfied customers Multiple Effects  Increase in usage rates  Shortages  Easy for others to enter with alternatives  Intense competition  New Knowledge  Customers hard to reach

15. Creating a Winning E-Business Second Edition, Chapter 2 15 Entrepreneurship and Business Models Types of Innovations –New to the world products or services –New to the market products or services –New product or service line that at least one competitor is offering –Addition to existing products or service lines –Product/service improvement, revision, including addition of new features or options –New application of existing products or services, including application to a new market segment –Repositioning of an existing product or service Source: Morris et al. Entrepreneurship & Innovation

16. Creating a Winning E-Business Second Edition, Chapter 2 16 Entrepreneurship and Business Models Entry Wedges Source: Morris et al. Entrepreneurship & Innovation

17. Creating a Winning E-Business Second Edition, Chapter 2 17 What is a Business Model? Six key questions –How do we create value? –For whom do we create value? –What is our source of competence/ advantage? –How do we differentiate ourselves? –How do we make money? –What are our time, scope, and size ambitions?

18. Creating a Winning E-Business Second Edition, Chapter 2 18 Porter’s Competitive Forces Model: How the Internet Influences Industry Structure

19. Creating a Winning E-Business Second Edition, Chapter 2 19 Factors Affecting E-Business Success The network effect –Total value of a product, service, or technology grows as more and more people use it Telephone system example –Single telephone has no value; as more people join the telephone system, the value of each telephone increases uBid online auction site example –As more people participate, the auction site becomes more valuable to buyers and sellers Second Life

20. Creating a Winning E-Business Second Edition, Chapter 2 20 Factors Affecting E-Business Success

21. Creating a Winning E-Business Second Edition, Chapter 2 21 Factors Affecting E-Business Success

22. Creating a Winning E-Business Second Edition, Chapter 2 22 Factors Affecting E-Business Success

23. Creating a Winning E-Business Second Edition, Chapter 2 23 Factors Affecting E-Business Success Innovative marketing ideas –Hotmail and viral marketing example Hotmail users grew at a rapid rate because of electronic word of mouth coupled with the network effect Electronic word of mouth or viral marketing spreads from user to user in the same way a human virus spreads from person to person

24. Creating a Winning E-Business Second Edition, Chapter 2 24 Factors Affecting E-Business Success

25. Creating a Winning E-Business Second Edition, Chapter 2 25 Factors Affecting E-Business Success Scalability –Ability of a business to function well in the face of rapid growth Systems and procedures meet customers needs AllAdvantage e-business failure example –E-business idea: Paying for users to browse the Web and view advertising –Millions of customers signed on; advertisers did not –No scalability with rapid growth in customers

26. Creating a Winning E-Business Second Edition, Chapter 2 26 Factors Affecting E-Business Success Ease of entry into electronic markets –Low-cost technologies make it easy to create new e-businesses –eBay and online auction example Easy for consumers to interact at auction site Web auction software is cheap and easy to install /maintain E-businesses earn commissions without having to manage, warehouse, and distribute products

27. Creating a Winning E-Business Second Edition, Chapter 2 27 Factors Affecting E-Business Success

28. Creating a Winning E-Business Second Edition, Chapter 2 28 Factors Affecting E-Business Success Ease of entry into electronic markets (continued) –Competitive barriers to overcome Failure to secure first-mover advantage Lack of name identification Lack of customer loyalty

29. Creating a Winning E-Business Second Edition, Chapter 2 29 Factors Affecting E-Business Success Ability to quickly adapt to marketplace changes –Rapid knowledge transfer –Need to make decisions quickly –Exploit new ideas and opportunities –Handle new challenges Amazon.com is an example of ongoing evolution from a basic e-business idea

30. Creating a Winning E-Business Second Edition, Chapter 2 30 Factors Affecting E-Business Success

31. Creating a Winning E-Business Second Edition, Chapter 2 31 Exploiting E-Business Advantages Expand the market –Business and consumers are no longer bound by constraints of time, space, physical location –Opportunity to reach larger market –Ticketmaster example

32. Creating a Winning E-Business Second Edition, Chapter 2 32 Exploiting E-Business Advantages

33. Creating a Winning E-Business Second Edition, Chapter 2 33 Exploiting E-Business Advantages Acquire greater business visibility –Get business name, products, and services in front of potential customers more quickly –Auto industry example

34. Creating a Winning E-Business Second Edition, Chapter 2 34 Exploiting E-Business Advantages

35. Creating a Winning E-Business Second Edition, Chapter 2 35 Exploiting E-Business Advantages

36. Creating a Winning E-Business Second Edition, Chapter 2 36 Exploiting E-Business Advantages Use the power of the Internet and Web to maximize customer relationships and improve responsiveness –Create customer loyalty –Stay in touch with customer needs –Build one-on-one relationships –Provide information to enrich customers’ online experience Southwest Airlines example

37. Creating a Winning E-Business Second Edition, Chapter 2 37 Exploiting E-Business Advantages

38. Creating a Winning E-Business Second Edition, Chapter 2 38 Exploiting E-Business Advantages Create new products and services –Opportunities for new e-business ideas where products or services are accessed over the Web Business software applications Server facilities for data file backup Legal dispute resolution –Cybersettle example Web hosting services –Rackspace Managed Hosting example

39. Creating a Winning E-Business Second Edition, Chapter 2 39 Exploiting E-Business Advantages

40. Creating a Winning E-Business Second Edition, Chapter 2 40 Exploiting E-Business Advantages

41. Creating a Winning E-Business Second Edition, Chapter 2 41 Exploiting E-Business Advantages Reduce costs of running a business –Sales and customer support costs –Transaction costs –Order handling costs Dell Computers, Cisco Systems, and Microsoft Corporation examples

42. Creating a Winning E-Business Second Edition, Chapter 2 42 Exploiting E-Business Advantages

43. Creating a Winning E-Business Second Edition, Chapter 2 43 Exploiting E-Business Advantages

44. Creating a Winning E-Business Second Edition, Chapter 2 44 Chapter Summary An entrepreneur assumes the risks of starting and operating his or her own business Entrepreneurial abilities –Leadership –High-energy –Self-confidence –Organization skills –Ability to act quickly

45. Creating a Winning E-Business Second Edition, Chapter 2 45 Chapter Summary Five stages of the entrepreneurial process –Decide if you are an entrepreneur –Decide to buy or start new business –Plan the business –Operate the business –Harvest the business

46. Creating a Winning E-Business Second Edition, Chapter 2 46 Chapter Summary Factors that can affect e-business success –Network effect –Innovative marketing ideas –Scalability of the e-business idea –Cost of entry into the marketplace –Ability to overcome competitive barriers –Ability to exploit inherent advantages