BTA3: Study Guide: e-Business Models – Print Version
PART - 1
What is a Business Model ?
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A business model is the method of doing business by which a company can sustain
itself -- that is, generate revenue.
The business model spells-out how a company makes money by specifying where it is
positioned in the market place.
Some models are quite simple. A company produces a good or service and sells it to
customers. If all goes well, the revenues from sales exceed the cost of operation and
the company realizes a profit.
Other models can be more complicated: Broadcasting is a good example. Radio and
later television programming has been broadcasted over the airwaves free to anyone
with a receiver for much of the past century. The broadcaster is part of a complex
network of distributors, content creators, advertisers and listeners or viewers. Who
makes money and how much is not always clear at the outset. The bottom line
depends on many competing factors.
New vs tried-and-true models
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Internet commerce will give rise to new kinds of business models. That much is
certain.
The web also uses tried-and-true models. Auctions are a perfect example. They have
been widely used throughout the world to set prices for such items commodities and
unique items like fine art and antiquities.
Can you name an auction based e-business?
Basic e-business Types
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B2B -- Business-to-business is a marketing strategy which involves the transaction
of goods or services between businesses
B2C -- Business-to-consumer (also business-to-customer) describes activities of
commercial organizations serving the end consumer with products and/or services.
C2C -- Consumer-to-consumer involves electronically facilitated transactions
between consumers through some third party. The sites are only intermediaries, just
there to match consumers, they have do not check quality of product being offered.
There are others, can you guess the acronymns: C2B, B2G, G2C
Things to Review / Questions to answer:
1. What is a “business model”?
2.Identify 3 different businesses that follow three different revenue models. Explain
HOW they make money.
3. Identify two different web businesses with different revenue models. Explain how they
make money.
4. What are the three “Basic” types of business? Define their acronymns in each case.
5. Define C2B, B2G, G2C.
Specific e-business models
Merchant Model
Businesses that use this model are known as “etailers”:
- selling physical goods (order fulfillment + outbound logistics)
- selling digital goods - "content" (magazines, music, software, etc. )
There are a few specific variations:
Virtual Merchant --a retail merchant that operates solely over the web. [Amazon.com]
Catalog Merchant -- mail-order business with a web-based catalog. Combines mail,
telephone and online ordering. [Lands' End]
Click and Mortar -- traditional brick-and-mortar retail establishment with web storefront.
[Future Shop]
Bit Vendor -- a merchant that deals strictly in digital products and services and, in its purest
form, conducts both sales and distribution over the web. [Apple iTunes Music Store]
Questions to Answer on the “Merchant Model:
1.Find additional examples of a Virtual Merchant, Click and Mortor and Bit Vendor.
Explain why each example fits the model and include the web address.
Read Virtual Goods: the next big business model and then answer the following questions:
2. What is a “virtual good”? Give some examples.
3. What is a “gold farmer”? (hint: read the “plight link” or this)
4. Why do people spend real money on virtual objects? Be specific.