wk 2 - Digital business

Question 1

Digital business def

Answer 1

Gartner defines digital business as the creation of new business designs by blurring the digital and physical worlds

Question 2

Waves of business digitisation

Answer 2

• Originated in the late 1990s when companies started to use the web to sell online - e-commerce rise
  
  • Into the 2000s, Web 2.0 movement of content consumers to creators
  • Move of products becoming digital e.g music and books
  • 2010s, digital footprints left behind to assist in business decisions, new digital entrants such as uber and digital channels extended to mobile and everyday devices

Question 3

Business to Consumer (B2C)

Answer 3

retailing products and services to individual shoppers

value chain - customer chain

Economic actors - company / consumers

Nature of goods/services - standard price items

Pattern of commerce - cash / credit

Form of control - markets

Question 4

B2B

Answer 4

sales of goods and services among businesses

value chain - supply chain

economic actors - company / suppliers

nature of goods / services - customised / high price items

pattern of commerce - credit / repeat

form of control - hierarchies

Question 5

C2C

Answer 5

consumers selling to consumers

Value chain - community chain

Economic actors - consumers

Nature of goods / services - negotiated / low price

pattern of commerce - cash

form of control - networks

Question 6

order fulfilment

Answer 6

Order fulfilment: all of the activities needed to provide customers with ordered goods and services including related customer services

Question 7

logistics

Answer 7

Logistics: the operations involved in the efficient and effective flow and storage of goods, services and related info from point of origin to point of consumption

Question 8

Brick and Mortar

Answer 8

traditional companies based on the physical world only
e.g grocery store

Question 9

Pure - play (virtual)

Answer 9

Pure-play (or virtual) organisations are companies that are engaged only in electronic commerce

Question 10

Clicks and mortar

Answer 10

organisations are those that conduct some e-commerce activities, yet there primary business is done in the physical world

Question 11

e - commerce advantages

Answer 11

+ May eliminate need for maintaining physical shop front
+Reduced transaction costs: increased transaction speed
+Ease of crossing geographical boundaries
+Web sites available 24/7

Question 12

e-commerce barriers

Answer 12

• SME’s digital readiness
  
  • Regulatory barriers
  • Suitability of product - ‘feel and touch’
  • Trust, fraud issues
  • Digital divide

Question 13

Disintermediation

Answer 13

removal of intermediary steps in a value chain e.g selling directly to consumers

Question 14

reintermediation

Answer 14

Reintermediation - shifting of the intermediary function in a value chain to a new source
E.g for delivery now need a third-party logistics provider such as the royal mail

Question 15

Channel Conflict

Answer 15

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 or impedes it from achieving its own goals
For example, web-based direct sales channel
 Risk of alienating traditional sales reps (internal conflicts) or distributors (external conflicts) Threats may include lockouts or even lawsuits by distributors
Disintermediation is usually not instantaneous: how to placate partners in the distribution channel while taking steps toward the eventual demise of these relationships?

Question 16

economic impact on digitisation

Answer 16

Far from inevitable though!
Strategies to avoid downward price spiral include:
Patenting
Versioning
Creating a network effect and deriving extra value from it
Product bundling and cross-subsidisation

Question 17

sharing economy

Answer 17

Actually a company may not make or own products at all…
The Internet has enabled the growth of what some refer to as the “sharing economy”

Original intention: Internet-enabled sharing
Use of tech platforms to allow consumers to make unused resources (temporarily) available to other consumers

Powerdrill example
People said to value “access over ownership”

Claimed benefits

Save money, earn income
Reduce carbon footprints
Strengthen community ties

criticisms - increasingly monopolistic platforms