e-business firms · n flexible manufacturing process for customization, bundling needs n...

Click here to load reader

Post on 07-Apr-2020

0 views

Category:

Documents

0 download

Embed Size (px)

TRANSCRIPT

  • 1

    EE--Business FirmsBusiness Firms

    Prof. Lü Ting-Jiee-Biz Center of Beijing University of Posts & Telecom.

    E-mail: [email protected]

    2

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    What is an E-Business Firm?

    Any firm that applies digital technologies and networking to organize itself and manage its business operations and relationshipsTo a large extent, most firms rely on digital technologies and networkingA spectrum:n firms w/ an IT dept. => entirely “virtual” firms

  • 2

    3

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    What is in the “E”? -- Proprietary vs. Open

    E-firms exist for several decadesn “Just-in-time inventory” is not a new term after

    the Internetn But traditional e-firms use proprietary technologyw VAN (Value-added Network) -- a proprietary networkw EDI (Electronic Data Interchange) --a proprietary format

    for exchanging business data

    w Expensive

    Here, we only focus on Internet-based E-firmsn Open technology (e.g., Internet, XML)n Cost-efficient

    4

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    EDI vs. XML

  • 3

    5

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Smart E-firm -- Being Flexible and Responsive

    Observe E-firms: Two Focuses

    Internal Organizationn degree of virtualizationn internalize a function vs. outsourcen structure

    External Relationshipn B2B: interaction w/ business partnersn B2C: interaction w/ customersn External relationship may force the changes in

    internal organization

    6

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    E-firms: extend inward-focused processes outward

  • 4

    7

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Three Waves of E-firms

    8

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Virtualization

    An e-firm is networked (Internet/Intranet/Extranet)No time and physical constraintsn transact in real-timen customersn employees (telecommuters)n productsn processes

    Can be Global

  • 5

    9

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    What is a firm? -- An economic unit that n purchases inputs -- capital, labor and materialn produces outputs -- products and servicesn sell outputs to customersn profit = sales revenue - cost of production

    A firm evolves when it offers a more efficient solution to certain resource allocation problems than the marketplace.

    Internalize vs. Outsource

    10

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Internalize vs. Outsource

    Boundary of the firm depends onn cost of purchasing a service or product in the

    market + transaction cost associated w/ the purchase (e.g., contracting, negotiation, monitoring)

    n Vs. cost of internalize such a service (e.g., hiring, administration, internal controls)

  • 6

    11

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Internalize vs. Outsource

    •Firms organize to take advantage of internal scale economy and reduce transaction costs

    •When markets are more efficient, firms break down, or many of their functions are outsourced

    Existence of an e-firm implies: it must have corecompetence and add value

    12

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    E-firms Internal Structure -- Control vs. Coordination

    From rigid organization To a form like markets

    •Emphasize communications and collaboration among its employees, suppliers and customers•Alliances and associations may function as extended corporations•Hierarchical controls vs. Coordination•Rapid, interactive response

  • 7

    13

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Characteristics of E-firms I: Customer-focused w/ flexible and responsive products/services

    Physical Firms E-firms

    •Focus on “Cost Minimization”

    •Mass production

    •Wholesaling & Retailing

    •Focus on “Satisfying demands”

    •Customization

    •Direct marketing w/ responsive delivery

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Drivers of Customer Value

    Innovation Management:New Product Development and Design

    Value Creation

    Supply-Chain Relationships:Operational Excellence in Order-Delivery Processes

    Customer Relationships:Managing Market-Based Assets and Value Networks

    Source: Raj Srivastava, 1999

  • 8

    15

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Front-office Automation & Agents for B2C

    E-firms are adopting technologies forn Flexible manufacturing process for customization, bundling

    needsn Customer-driven merchandizing

    w Differentiation vs. Customizationw Mass Customized Productsw Customized Mass Products

    n Comprehensive, easy-to-use product informationn Real-time response to customer needs

    In most product markets, manufacturing accounts for 40%of total costs. The rest is for marketing and sales.

    16

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Characteristics of E-firms II: Smart Alliance and Association

    Hyperlinksn References and Redirectionsn e.g., the ability to leverage the Internet for

    information & knowledge based cooperation with “advantaged partners”w e.g., Encarta of MSN with Smarterkids.com

    Shared ownershipMarket-like coordinationShort-term and incentive-basedn vs. a fixed number of business partners with long-

    term contracts

  • 9

    17

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Alliance & Association Relationships

    Quasi-integrated groups of firmsn vs. a tight corporationn w/ temporary relationship to provide customized

    products on demandn e.g.,

    Portfolio productsNeed-based coordination

    or intermediaries

    18

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Alliance & Association Relationships

    n Demand for standardization, compatibilityw to smooth out bundling and integration in both vertical

    and horizontal dimensionsw e.g., standardized interface for hardware, standardized

    protocol for software

    Coordination through Intermediariesn intermediaries are not only useful for B2C, but

    also for B2Bn B2B needs an easy way to find qualified suppliers

    in real-time

  • 10

    19

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Examples of Flexible Alliance & Association Relationships

    Contracting & outsourcing n inventory separated from marketing, e.g.,

    Amazon’s alliance w/ Target, Toy’R’Usn however, Dell doesnot outsource core process --

    manufacturing

    Quick response replenishmentn Just-in-time/short-term supply chain managementw e.g., distributor checks Walmart’s inventory online in

    real-time

    n bar code, EDI --> Commernet’s OBI (Open Buying on the Internet

    Distribution and logistics, integrated logisticsn efficient warehousingn e.g., Amazon

    20

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Customer Sales Ordering

    Procurement

    Integration

    Bank

    Portal

    Supplier 1

    Supplier nDigital Inventory

    CAAssurer

    . . .

    1

    2, 23

    3

    4, 166

    5

    78

    9, 17

    9,17 11, 18

    11, 1811, 18

    Marketing

    12

    13

    14

    15

    19

    20

    21

    22

    9, 10, 17

    Intermediary

    e.g., An e-business process model for a digital content (e.g., Linux package) distributor

  • 11

    21

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    1. Customer fills in request forms with specifications, preferences and credit card information.2. Sales checks the customer's credit through banking systems.3. If the customer has good credit, sales checks the digital inventory to see if it has all the necessary components to fulfill the customer request.4. If further purchase is needed, sales forwards the corresponding requests to procurement.5. Procurement queries digital inventory about who are the existing suppliers that can potentially supply the components.6. If new suppliers are needed, procurement launches search agents, who search portal sites, find best match, and make up a list of URLs of new suppliers.7. Procurement obtains assurance of suppliers.8. If the supplier has good credit, procurement obtains the cert ified public key of the supplier from a creditable certificate authority.9. Procurement makes requests to suppliers, both existing suppliers and new ones, and notifies the integration department.10.Procurement provides assurance and public key information to integration.11. Suppliers provide product and service information, includingprice and availability etc., to integration. Integration obtains existing component information from the digital inventory.

    Procedure:

    22

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    E-firm Competitiveness

    First mover advantage and reputationn First to achieve flexibility and responsiveness, gets

    reputation and succeeds, but late-comers can duplicate their success (Netscape vs. Microsoft)

    n Needs a stream of innovations

    Entry costn Low barriers to entry, more competitionn Open, interoperable environment lowers costs

    Innovations edgen Can small firms continue to innovate? Or only big

    companies can afford R&D?

  • 12

    23

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    12. Integration briefly bundles component information into different final product packages and calculates the costs, delivers the package information to market ing.13. Marketing decides price, creates a catalog customized to the customer's request and forwards the catalog to sales.14. Sales delivers the catalog to the customer.15. Customer selects and orders.16. Sales notifies procurement of the final order.17. Procurement notifies necessary suppliers and guarantees future payment to them.18. Suppliers provide components to integration and integration obtains other necessary components from the digital inventory.19. Integration bundles components into the package that the customer ordered and delivers the final package to the customer.20. Integration notifies sales about the successful delivery.21. This step is needed in case there is a need for the supplier to directly offer its services to the customer as part of the order fulfillment.22. This step is needed if step 21 is executed. The supplier notifies the sales of the fulfillment of its direct services.23. Sales receives payment from customer's bank.

    Continued...

    24

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Implementation issues --without integration, applications are separate

  • 13

    25

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Integration and Standardization are Important

    26

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    How to integrate? -- find the right infrastructure

  • 14

    27

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    How to integrate? -- find the right infrastructure

    28

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Traditional Strive for Efficiency --Business Automations Reside in

    ERP (Enterprise Resource Planning)n Leaders: SAP,Oracle, J.D. Edwards, PeopleSoft,

    Bann

    CRM (Customer Relationship Management)n Siebel, SAP, Oracle, PeopleSoft, Baan

    SCM (Supply Chain Management)n i2 Technologies, SAP, Manugistics

  • 15

    29

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Traditional Strive for Efficiency --Business Automations Reside in

    Manufacturing Softwaren CAD/CAE (Computer-aided Design and

    Engineering)n IA (Industrial Automation)

    Plant Managementn Aspen, IBM, Honeywell

    Proprietary technology builds “inefficiency wall”between disparate management; Manual processes exist to fill gaps

    30

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    The Weights

  • 16

    31

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Moves in the Digital Economy --Strive for Internet-based Integration

    Extend to Internet Space, e.g., mySAP.comMove to XMLBreak the “walls” within an enterprisen “Integrate new and legacy systems, networks, applications,

    databases, and business processes in disparate units such as sales, order processing, customer management, accounting, inventory, procurement, engineering, manufacturing and warehousing”

    n EAI (Enterprise Application Integration) w a newer category;w Active Software, BEA, Extricity Software, IBM,

    webMethods, TIBCO Software, Vitria, etc.

    Intranets, even Extranets

    32

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    E-firm Revenue ModelsSalesn e.g., amazon.com (high-profit margin book business)n not only products, but also information & knowledge!

    Subscriptionn e.g., wsj.com

    Advertisementn e.g., google.com (70% revenue)

    Transaction feen Referral fee: e.g., pricewatch.com,

    bestbookbuys.com, amazon/target deal, yahoo!n Commission: e.g., ebay.com

  • 17

    33

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    E-firm Profit

    Profit = Revenue - CostOf course, COST REDUCTIONn e.g., Dell vs. HP/Compaqn e.g., radio webcasting business

    34

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    E-firm StrategiesProduct Firm vs. Process Firmn e.g., Amazon “earth’s biggest bookstore” -->

    “earth’s biggest customer database”w customization, recommendation, previous interestsw friends and favorites: community

    w e-cards, calendar services

    Alliances and Mergesn Expansion -- product/service rangew e.g., Amazon/Circuit City, Toy’R’Us, Target

    n Expansion -- globalw reuse processes

    n Does the Size matter?

  • 18

    35

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    KEYS

    RESPONSIVENESS --- AGILITY is important! Need to respond to market changes quickly.FLEXIBILITY n Opennessn Continuous Innovationsn Trust

    Being Creative Requires Knowledge!

    36

    BUPT- Biz Center 北京邮电大学北京邮电大学 吕廷杰吕廷杰

    Q & AQ & A