Chapter 2

Chapter Idea – is to focus on business models and basic business concepts that you must be familiar with in order to understand e-commerce.

Business model – a set of planned activities design to result in a profit in a marketplace.
Business Plan – a document that describes a firm’s business model
E-commerce business model – a business model that aims to use and leverage the unique qualities of the internet and the world wide web

Eight Key Elements of a Business Model
1. Value proposition

a. How a company’s product or service fulfills the needs of the customers.

2. Revenue model

a. How the company plans to make money from its operations.

3. Market opportunity

a. The revenue potential within a company’s intended marketplace.

4. Competitive environment

a. The direct and indirect competitors doing business in the same marketplace, including how many there are and how profitable they are.

5. Competitive advantage

a. The factors that differentiate the business from its competition, enabling to provide a superior product at the lower cost.

6. Market Strategy

a. The plan a company develops that outlines how it will enter a market and attract customers.

7. Organizational development

a. The process of defining all the functions within a business and the skills necessary to perform each job, as well as the process of recruiting and hiring strong employees

8. Management team

a. The group of individuals retained to guide the company’s growth and expansion.

Portal – offers users powerful web search tools as well as an integrated package of content and service all in one place.
E – Tailer – online retail store
Content provider – information and entertainment companies provide
Transaction broker – processes online sales
Market creator – uses the Internet to create markets
Service provider – offers service online

Industry structure – the nature of players in an industry and their relative bargaining power
Industry value chains – The set of activities performed in an industry by suppliers manufactures and other distributors that form the final product.
Firm value chains – Set of activities performed within an individual fim to create the final product.
Business strategy – A set of plan for achieving superior long-term returns on the capital invested in a firm.