1 Figure 7.4 The Six Forces Model for the NE Era

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<ul><li><p>Figure 7.4 The Six Forces Model for the NE Era</p></li><li><p>Unsustainable Competitive Advantage through NE SystemsNE technologies, such as Enterprise Resource Planning (ERP) systems per se may not confer competitive advantage, as commercially available systems are available to anyone.Furthermore, even homegrown software systems are often easily imitated.Nevertheless, some firms are better at exploiting these systems than others.</p></li><li><p>Sustainable Competitive Advantage through NE SystemsAccording to Ross, Beath and Goodhue (1996) sustainable competitive advantage comes from the following three areas:</p><p>Figure 7.10 Resources Leading to Sustainable Competitive Advantages</p></li><li><p>Alpha, Beta, and Omega Effects in Measuring NE Strategic SuccessThe GSU NE study depicts 3 anticipated levels of benefits [Straub and Klein (2001)]:Alpha 1st order changes that fairly immediately lower costs and improve productivity.Beta 2nd order changes occur when the full effect of intermediation comes into play.Omega 3rd order changes occur when the firm views NE strategy as a learning process to exploit information advantages over competitors.Firms that create a profile of a customer that indicates the type of products they prefer (e.g., Amazon), can profit from such information advantages.</p></li><li><p>Proprietary Data as a Resource that Captures a Relationship Resources that are publicly available or readily copied may not be able to provide a sustainable advantage.But those (such as a customer database) over which a firm has proprietary control may provide competitive advantage since these often create large barriers to potential new entrants.Creating and sustaining competitive advantage over time can thus be possible for firms that gather and creatively use their proprietary customer data. </p></li><li><p>Figure 7.13 Proprietary Data as Resources that Capture Relationships</p></li><li><p>3 Steps Needed to Dominate the Relationship with CustomersFirst, there must be a commitment to collecting data about customers despite the costs.Second, the firms NE systems must be able to be personalized to be able to respond to this customer information.Third, customers must be able to be pushed information that successfully targets their personal needs.</p></li><li><p>Table 8.2a Types of NE Business Models (cf. Weill &amp; Vitale 2001)Model TypeDescription</p></li><li><p>Table 8.2b Types of NE Business Models (cf. Weill &amp; Vitale 2001)Model TypeDescription</p></li><li><p>Three Key NE ResourcesThe relationship with the customer. This is usually the most important long-term resource, as it converts to loyalty and sustained revenues.Alternatively, this might be a revenue-producing relationship with a complementor. Proprietary data is one of the most valuable resources a firm can own as it can lead to a sustainable competitive advantage.The transaction may be the least important of the three.Another way to see this is as a customer perception of your company as the point of contact. NE also allows firms to establish links directly with their customers base and by-pass intermediaries.</p></li><li><p>Table 8.3 Ownership of Resources by NE Business Models (cf. Weill and Vitale 2001)</p></li><li><p>Figure 8.2 Graphical Symbols for Interpreting Business Model Schematics Schematics allow managers to configure their business models in ways that maximize their effectiveness, as well as helping others understand a model and, in so doing, helping to convince others of its investment potential.</p></li><li><p>Figure 8.3 Type I: Content Provider Schematic</p></li><li><p>Figure 8.4 Type 2: Direct-to-Customer Schematic</p></li><li><p>Figure 8.5 Type 3: Full Service Provider Schematic</p></li><li><p>Figure 8.6 Type 4: Intermediary Schematic</p></li><li><p>Figure 8.7 Type 5: Shared Infrastructure Schematic for Suppliers-Members</p></li><li><p>Figure 8.8 Type 5: Shared Infrastructure Schematic for Customers-Members</p></li><li><p>Figure 8.9 Type 6: Value Net Integrator Schematic</p></li><li><p>Figure 8.10 Type 7: Virtual Community Schematic</p></li><li><p>Figure 8.12 Type 8: Single Point of Contact Schematic</p></li><li><p>Figure 8.13 Lonely Planet as a Hybrid (Molecular) Business Model Composed of Many Atomic Models</p></li><li><p>Chapter 9. Intermediation and CybermediationFoundations of Net-Enhanced OrganizationsDetmar Straub, 1st EditionCopyright 2003 John Wiley &amp; Sons, Inc.</p></li><li><p>9.2 What is Intermediation?Intermediation: a business process that lies between and facilitates (adds value to) the points in a value chain (see Figure 9.1)Intermediaries often provide an information-based service rather than a product. Their typical role is to bring multiple buyers and sellers together.Common examples are: stock brokers and travel agents.Figure 9.1 Intermediaries in the Value Chain</p></li><li><p>Intermediaries in a Value ChainThe role of an intermediary is to:Use information to match buyers and sellers, Facilitate the rapid transfer goods and services through their operation.Two major categories of intermediaries are:Virtuals: who do not take ownership of products and services.Aggregators: who may own, but do not produce or even assemble the goods and services themselves.When an intermediary offers its services over the Web, it is called a cybermediary.</p></li><li><p>9.4 Dis-intermediation, Re-intermediation and Cyber-mediation (Figures 9.2 and 9.3)Disintermediation: adding a parallel link going around intermediators [Delta Airlines, encouraged customers to call direct to the airline, saving a 5-15% commission and disintermediating its travel agents].Re-intermediation: electronic re-insertion into the role of intermediator in a firms value chain [Delta.com allowed customers to go directly to its Web site to buy electronic tickets, taking over the job of brokers via a direct connection. This is a direct-to-consumer business model, or possibly a shared infrastructure model, as in the case of OrbitzA firm that offers intermediary services over the Web, is a cybermediary. This can disintermediate agents.</p></li><li><p>Figure 9.2 Disintermediation via Traditional ChannelsFigure 9.3 Reintermediation of Delta into the Value Chain</p></li><li><p>9.5 Theory of Intermediation Since purchases and transactions that are least costly are preferable to customers, especially for commodity goods and services, All other things being equal, the value chain with the fewest intermediaries will have the lowest price. However, there are additional costs:Intermediaries have their own cost structure.Consumers incur costs when searching for goods/services to purchase.Thus a consumers must weigh a cost tradeoff between searching for the cheapest commodity price and paying extra to use an intermediary.</p></li><li><p>Figure 9.5 Intermediation Pre- and Post- Internet</p></li><li><p>Intermediation Pre- and Post-InternetA decade ago, for example, intermediation in air travel, involved both airlines and consumers paying commissions to travel agents.When the issue of disintermediation was first discussed, many predicted the complete demise of intermediators. Sarker, Butler &amp; Steinfield (1995) argued instead that cyberspace would change intermediation, but never make it irrelevant.They differentiated between categories of threatened intermediaries, like travel agents, who could lose their business, with cybermediaries, (e.g., Travelocity), who had very low marginal costs and would thrive. Supplemented intermediaries, firms that decide to reintermediate into the value chain, were also predicted to succeed.</p></li><li><p>Table 9.2 Value-Added Roles of Intermediaries and Cybermediaries (based on Westland and Clark, 2000)</p></li><li><p>9.7.1 Portals and Content AggregatorsCompanies like Yahoo and Amazon are described as cyberspace portals and content aggregators Their true business models are complex hybrids and include being intermediaries and making direct-to-consumer sales.Again the main idea is replacing physical processes with information processes.If Yahoo was a retailer like Wal-Mart, its distribution system, etc., would have to be huge.Instead it handles these processes through its Web-based and information-based systems. Its market niche in the economy is based on this.</p></li></ul>