lesson 2 - digital businesses Flashcards
what are digital businesses?
the creation of new business designs (new products + services, business models etc) by blurring the digital and physical worlds. this looks into physical products becoming smart and connected.
what is the process over the decades of digitisation?
late 1990’s: rise of e-commerce, people using the web to sell online.
2000’s: creation of social media, online advertising, products themselves becoming digital.
2010’s: digital channels becoming mobile + everyday devices, new entrants (uber, airbnb) to existing business sectors, digital footprints being used to drive decisions and create opportunties.
what is e-commerce?
process of buying and selling goods + services electronically.
what are e-businesses?
e-commerce + the use of internet or other digital technologies for performing (internal) business processes + coordination with suppliers and partners.
what are the categories of e-commerce with the nature of ppts and what do they mean?
business to consumer (b2c): retailing products and services to individual shoppers.
business to business (b2b): sales of goods among businesses.
consumer to consumer (c2c): consumers selling to consumers.
what are the categories of e-commerce with the connection to the buyer and what do they mean?
through a laptop or desktop computer, mobile commerce: using handheld devices (phone, tablet), location based commerce: m-commerce transactions targeting individuals in specific locations at specific times.
what are the characteristics of b2c e-commerce?
customer value chain, company and consumers are economic actors, the nature of goods are standard priced items, the pattern of commerce is cash or credit, and the form of control is through markets.
what are the characteristics of b2b e-commerce?
supply value chain, company and supplier economic actors, the nature of goods are customised and highly priced, the pattern of commerce is credit or repeated and their is a hierarchy form of control.
what are the characteristics of c2c e-commerce?
community value chain, consumers are economic actors, the nature of goods is negotiated and lower priced items, the pattern of commerce is cash and their is a network style form of control.
what types of supply occur in electronic delivery and what do they mean?
supply of services: can be 100% electronically with considerable cost reduction potential eg electronic banking, travel service, online job markets.
supply of products: digitised products such as mp3 music, e-books.
what is order fulfilment?
all of the activities needed to provide customers with ordered goods + services including related customer services.
what is logistics?
operations involved in the efficient and effective flow and storage of goods, services and related info from point of origin to point of consumption.
what are e-logistics?
the use of digital technologies to manage the transportation and distribution of goods for online sales.
what are the types of companies in the new economy and what is the definition of them?
bricks-and-mortar: traditional companies based in the physical world only.
pure-play (virtual): companies that only use e-commerce.
clicks-and-mortar: those that do some e-commerce but their primary business is done in the physical world.
what are the advantages of e-commerce?
may eliminate the need for maintaining a physical shop, websites are 24/7, reduced transaction costs + increased transaction speed, easy for crossing geographical boundaries, ease of updating existing and distributing new info, may empower small businesses.
what are the barriers of e-commerce?
regulatory barriers, some products might not be suitable (can not feel or touch them), trust and fraud issues, sme digital readiness as they lack the technological infrastructure and digital skills to set up an effective online store, digital divide.
how has the internet changed the economics of information?
by shrinking information asymmetry: making it easier for customers to obtain and compare pricing and other info.
by extending both richness and reach of information provision: digital channels are capable of reaching a wider audience and have the opportunity for mass personalisation.
how does the internet reduce transaction costs?
finding buyers: no mass mailing of expensive brochures or tv ads, fully automatic collection of payments, support: email, online faq’s, forums instead of person to person, chatbots.
how does the internet impact the value chain?
ict’s support and streamline the internal value chain activities.
how does the internet impact the value system?
the internet is a new distribution channel, allowing businesses to coordinate more closely with value chain partners, transforming many value chains.
what is disintermediation?
cutting out the “middleman”, removal of steps in a value chain (selling directly to customers) to lower transaction costs + have price advantages.
what is channel conflict?
tension among different distribution chains for the same product or service. channel member perceives another channel to be engaged in behaviour that prevents it from achieving its own goals eg web-based direct sales channels.
what is reintermediation?
new types of middlemen appearing instead, a shift of having a link between the value chain to a new source. examples are royal mail for sending a parcel and price comparison sites.
what are porters 5 forces?
forces of competition that determine industry structure and how economic value is divided among the industry players in an industry.
what happens for traditional industries with tangible products?
marginal costs increase as production capacity becomes stretched. each competitor makes max profit when they set their production output to a level where marginal cost meets marginal revenue (market price).
what is marginal cost?
the cost added by producing one additional unit of a product or service.
what happens for markets with digital products?
near 0 marginal costs most of the costs are fixed costs incurred early. creates incentive to undercut prices of competitors in an attempt to grab the market: with others following suit though fixed costs no long recovered and profits would disappear.
what are the strategies used to avoid a downward price spiral?
patenting, versioning, creating a network effect, deriving extra value from it, product bundling + cross subsidisation.
what is sharing economy?
internet enabled sharing, use of tech platforms to allow customers to make unused resources available to other consumers. people value access over ownership.
definition is blurred as an increased supply of unused resources present a growing challenge to sector holders eg airbnb vs hotels, ubers vs taxis.
what are the benefits of sharing economy?
save money, earn income, reduce carbon footprint, strengthen community ties.
what are the criticisms of a sharing economy?
unfair practices, on demand services could be fuelling worker exploitation, increasingly monopolistic platforms (platforms owned by a single entity to prevent competitors).
