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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
Factors AffectingE-Business Success
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
Factors AffectingE-Business Success
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
Factors AffectingE-Business Success
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
Factors AffectingE-Business Success
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
Factors AffectingE-Business Success
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