Creating a Winning E-Business Defining Your E-business Idea Chapter 2.

Creating a Winning E-Business

Defining Your E-business IdeaChapter 2

Learning Objectives

Identify entrepreneurial abilities

Describe the entrepreneurial process

Understand the factors affecting e-business success

Identify ways to exploit e-business advantages

Entrepreneurial Process

Entrepreneur– Assumes the risks of starting and operating

his or her own business– Must be able to lead others– Must believe in his or her business idea– Must have the self-confidence to

accomplish business goals

The Entrepreneur

E-business entrepreneur examples– Jeff Bezos, Amazon.com– Pierre Omidyar, eBay– Kelby Hagar, GroceryWorks.com and Digital

Witness– Jason Zasky, Failure Magazine

What did all of these guys have in common?– The ability to see the future and challenge the

status quo

Entrepreneurial Process

Entrepreneurial abilities– Leadership traits (Tribes attributes)– Good communication skills (Tribes attributes)– High-energy level– Self-confidence– Organizational skills– Ability to act quickly and decisively– Independent, goal-oriented, creative,

competitive

Factors AffectingE-Business Success

The network effect– Total value of a product, service, or

technology grows as more and more people use it• Telephone system example

– Single telephone has no value; as more people join the telephone system, the value of each telephone increases

• uBid online auction site example– As more people participate, the auction site

becomes more valuable to buyers and sellers

• Twitter


Innovative marketing ideas– Hotmail and viral marketing example

• Hotmail users grew at a rapid rate because of electronic word of mouth coupled with the network effect

• Electronic word of mouth (Godin one of first marketers wrote about this) or viral marketing spreads from user to user in the same way a human virus spreads from person to person


Scalability– Ability of a business to function well in the

face of rapid growth• Systems and procedures meet customers

needs• AllAdvantage e-business failure example

– E-business idea: Paying for users to browse the Web and view advertising

– Millions of customers signed on; advertisers did not

– No scalability with rapid growth in customers


Ease of entry into electronic markets– Low-cost technologies make it easy to

create new e-businesses– eBay and online auction example

• Easy for consumers to interact at auction site

• Web auction software is cheap and easy toinstall /maintain

• E-businesses earn commissions without having to manage, warehouse, and distribute products


Ease of entry into electronic markets (continued)– Competitive barriers to overcome

• Failure to secure first-mover advantage• Lack of name identification and name’s

ability to sell the brand• Lack of customer loyalty


Ability to quickly adapt to marketplace changes– Rapid knowledge transfer– Need to make decisions quickly– Exploit new ideas and opportunities– Handle new challenges

• Amazon.com is an example of ongoing evolution from a basic e-business idea

Exploiting E-BusinessAdvantages

Use power of the Internet and Web to maximize customer relationships and improve responsiveness – Create customer loyalty– Stay in touch with customer needs– Build one-on-one relationships– Provide information to enrich customers’ online

experience• JetBlue example

Creating a Winning E-Business Defining Your E-business Idea Chapter 2.

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