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Introduction to

E-business

To Debbie and Richard

Introduction

to

E-business

Management andstrategy

Colin Combe

Butterworth-Heinemann is an imprint of Elsevier

Butterworth-Heinemann is an imprint of Elsevier

Linacre House, Jordan Hill, Oxford OX2 8DP

30 Corporate Drive, Suite 400, Burlington, MA 01803

First edition 2006

Copyright?2006, Elsevier Ltd. All rights reserved

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher Permissions may be sought directly from Elsevier's Science & Technology Rights Department in Oxford, UK: phone: (þ44) (0) 1865 843830; fax: (þ44) (0) 1865

853333; email: permissions@elsevier.com. Alternatively you can submit your

request online by visiting the Elsevier website at http://www.elsevier.com/locate/ permissions, and selecting Obtaining permission to use Elsevier material

British Library Cataloguing in Publication Data

A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Control Number:2005938727

ISBN-13: 978-0-7506-6731-9

ISBN-10: 0-7506-6731-1

For information on all Butterworth-Heinemann publications visit our website at http://books.elsevier.com

Printed and bound in The Netherlands

06 07 08 09 10 10 9 8 7 6 5 4 3 2 1

Contents

Prefacexiii

Acknowledgementsxvii

Chapter 1Introduction 1

Key issues1

Defining e-business1

The development of the new economy2

Types of e-business and related industries4

The growth of e-business5

Use of the internet8

Key people10

Scope of the book13

Structure of the book14

Case studies18

References19

Chapter 2E-business technology 21

Key issues21

Introduction21

The development of the internet22

The World Wide Web (WWW)23

Information infrastructure25

Electronic Data Interchange (EDI)28

Program languages29

Industry standards33

Wireless technology39

Interactive television46

Payment systems49

Summary50

Questions52

References52

Further reading52

Chapter 3E-business markets and models 53

Key issues53

Introduction53

E-businesses54

E-business environment55

E-marketplaces59

E-business markets61

E-business models66

Types of e-business models67

A framework for analysing e-business models78

Summary84

Questions and tasks85

References85

Further reading86

Chapter 4E-business economics 87

Key issues87

Introduction87

Towards perfect competition88

The effect of the internet on the competitive environment 89

Key economic characteristics of the internet90

Cost of production and distribution91

Disintermediation and reintermediation92

Mini Case Study: www.oag.com94

Economics of information95

Connectivity and interactivity98

Economies of scale99

Economies of scope99

Transaction costs100

Network externalities102

Switching costs104

Critical mass of customers105

Mini Case Study: Online gambling106

Pricing107

viContents

Summary113

Questions and tasks 114

References 114

Further reading 116

Chapter 5E-marketing 117

Key issues117

Introduction117

Internet marketing118

E-marketing plan119

The marketing mix126

Branding131

Online advertising132

Targeting online customers135

Interactive television and e-marketing137

Customer relationship management142

Summary147

Questions and tasks148

References149

Further reading150

Chapter 6The internet: law, privacy, trust and security 151

Key issues151

Introduction151

The internet and the law152

Privacy161

Trust166

Security169

Mini Case Study: BBC178

Summary179

Questions and tasks179

References180

Further reading181

Chapter 7The management of e-business 183

Key issues183

Introduction183

Managing knowledge184

Contentsvii

Managing applications systems for e-business188

Mini Case Study: Ryanair189

Customer Relationship Management (CRM)192

Supply Chain Management (SCM)195

Management skills for e-business198

Managing risk201

Summary207

Questions and tasks208

References209

Further reading210

Chapter 8E-business strategy: formulation 211

Key issues211

Introduction211

Strategic management and objective setting212

The strategic process213

Internal analysis216

External analysis227

Competitive strategies for e-business234

Summary236

Questions and tasks237

References238

Further reading238

Chapter 9E-business strategy: implementation 241

Key issues241

Introduction241

Strategic controls242

Organisational learning243

Organisational culture and e-business246

Organisational structure and e-business249

Mini Case Study: Sure Start256

Change management256

Mini Case Study: Levi Strauss261

Summary268

Questions and tasks269

References270

Further reading270

viiiContents

Chapter 10E-business strategy: evaluation 273

Key issues273

Introduction273

The evaluation process274

Organisational control and evaluation275

Financial evaluation278

Technology evaluation280

Human resources evaluation285

Website evaluation289

Business model evaluation293

Mini Case Study: Amazon.com294

E-business strategy evaluation294

Mini Case Study: Zen Internet296

Summary298

Questions and tasks299

References299

Further reading299

Chapter 11Gaining and sustaining a competitive advantage 301

Key issues301

Introduction301

Competing effectively302

First-mover advantages 306

Generic strategies 307

Mini Case Study: Glasses Direct 312

Integrating generic strategies 314

Expanding product lines 315

Lock-in and switching costs 315

Bricks and clicks 316

Winner-takes-all 317

The problem of sustaining competitive advantage 319

Summary 321

Questions and tasks 322

References 322

Further reading 323

Chapter 12E-business: the future 325

Key issues325

Introduction325

The phases of e-business development325

Contentsix

The performance of e-business327

The future of e-business331

Conclusion342

References344

CASE STUDIES

Case study 1Amazon.com 345

Introduction345

The Amazon.com business model for online bookselling347

References362

Further reading362

Case study 2e-Bay 363

Introduction363

The mission of e-Bay365

References375

Case study 3Tesco.com 377

Introduction377

Summary385

References386

Case study 4Yahoo! 387

Introduction387

The rise of Yahoo!388

The fall of Yahoo!390

The new regime at Yahoo!393

Yahoo! in Europe394

Expansion into China396

Summary398

References399

Case study 5boo.com 401

Introduction401

The value proposition of boo.com402

Problems with the boo.com concept404

xContents

The launch of boo.com406

The end game for boo.com409

Summary410

Reference411

Glossary413

List of companies421

Index423

Contentsxi

Preface

The twentieth century will be remembered for the rapid changes in technology every bit as much as the social and political upheavals that changed the lives of so many people. In fact, such has been the speed of development of new products, devices and gadgets that it is often easy to become ambivalent about technological advance. However, some inventions are of such life-changing significance that they make everyone sit up and take notice. Few technologies can be considered revolutionary in the impact they have had on society. Certainly, the telephone, television, air travel and some medical advances can be considered revolutionary in this context. To this list can be added the internet as a means of communication. Although there are some sections of society for whom the internet remains an alien device, the majority of people in countries with internet access have made use of this technology for a myriad of reasons, including education, entertainment, information, businessquotesdbs_dbs50.pdfusesText_50

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