Matakuliah
Tahun
Versi
: J0422 / Manajemen E-Corporation
: 2005
:1/2
MODULE 5 :
Crafting Business Models(Cont.)
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Learning Outcomes
 In this chapter, we will study:
 The four approaches to evolving business models serve as a
road map for evolving networked business.
 Evolving the American Express Interactive Business Models.
 Envolving the Amazon Business Models.
 Step by step approach to analyzing business models.
 Analyzing case study of AOL-Timer Warner merger.
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Outline Topic
 Evolving Business Models.
 A Step by Step Approach to Analyzing Business Models.
 Case Study : Valuing the AOL-Time Warner Merger.
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Content
Network businesses are built by artfully combining a variety of business
models. These businesses are then linked with others across multiple
value chain networks to create “web for the Web”.
Approaches to Business Model Evolution
Extend
Enhance
Enhance
Extend
Add functionality or features to current
product/service offerings or improve
performance of existing business
Enter new line of business and/or add new
business models
Expand
Exit
Exit
Exit a business or market or drop a
product/service offering
Expand
Add new product/service offerings
or enter new geographic markets
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So urce: Applegate, Lynd a M., Rober t D. Au sti n, and F. War r en McF arl a n, Corporate I nfor m a tion S t ra tegy a n d M a n agement . Bur r Ridge, IL:
McGr aw-Hill/Irwi n, 2002.
Ch ap t er 2 Figur e 2-4
Evolving American Express Interactive : Timeline of Events
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Evolving American Express Interactive :
Product/Service Enhancements
Evolving American Express Inter active:
P roduct/Service Enh a ncement s
Enhance
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Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-6
Evolving American Express Interactive :
Product/Service Category Expansion
Evolving American Express Inter active:
P roduct/Service Category Expa nsion
Expand
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Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-7
Evolving American Express Interactive :
Business Model Extension
Evolving American Express Inter active:
Business Model Extension
Extend
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Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-8
Evolving American Express Interactive :
An Integrated View
Evolving American Express Inter active:
An Integra ted View
Extend
Enhance
Expand
Exit
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Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-9
Evolving the Amazon.com business models : Timeline of Events
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Evolving the Amazon.com business models :
Product /Service Enhancements
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Evolving the Amazon.com business models :
Category and Geographic Expansion
Evolving Amazon.com:
Category and Geographic Expa nsion
Expand
12
Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-12
Evolving the Amazon.com business models :
Business Model Extension
Evolving Amazon.com:
Business Model Extension
Extend
13
Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-13
Evolving the Amazon.com business models :
An Integrated View
Evolving Amazon.com:
An Integra ted View
Extend
Enhance
Expand
Exit
14
Source: Applegate, Lynd a M., Rober t D. Austi n, and F. War r en McF arla n, Corporate I nfor mation Strategy and M anagement . Bur r Ridge, IL:
McGr aw-Hill/Irwin, 2002.
Chapter 2 Figur e 2-14
A Step-by-Step Approach to Analyzing business Models
 Step 1: Profile your current business models.
 Step 2: Determine how you might evolve your current
model and/or identify new models to pursue.
 Step 3: Use the business model analysis framework to
prioritize new models and initiatives.
 Evaluate the concept (opportunity).
 Evaluate the capabilities and resources required.
 Evaluate the value proposition (return to all
stakeholders).
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A Step-by-Step Approach to Analyzing business Models
 Step 4: Use the analysis in Step 3 as a benchmark to
develop real-time performance monitoring systems.
 Step 5: revise your strategy, implementation plan, and
performance measurements systems on an ongoing
basis.
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Case Study : Valuing the AOL-Time Warner Merger
Case Study :
Valuing the AOL-Time Warner Merger
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Case Study : Valuing the AOL-Time Warner Merger
AOL(Pre-Merger)
 In 1985, two entrepreneurs, Steven Case and Jim Kinsey,
launched an online information services that they named
Quantum Computer Services. In 1989, Steve Case won a
contest to rename Quantum as America Online(AOL).
 The company also actively pursued content and services
partnerships, signing agreements with American Airlines to
offer its Easy Sabre travel reservation services and with
CNN to offer online news and stock quotes, among other
things.
 Dec 2000, executives at AOL were publicly proclaiming
that the company was “the world’s leader in interactive
services, web brands, internet technologies, and electronic
commerce services”.
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Case Study : Valuing the AOL-Time Warner Merger
AOL(Pre-Merger)
 Four major line of business:
• Interactive Services develop and operated branded online
services, including AOL.com with over 27 millions members,
CompuServe with over 3 million members.
• Interactive Propertis provided branded online services that
were available not only on AOL.com but also on partner and
competitor websites.
• AOL International provided access to country-specific
versions of AOL.com within 16 countries outside the United
States.
• Netscape Enterprises provided software products, technical
support, consulting, and training services to enable business
users to share information, manage networks, and facilitate
electronic commerce.
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Case Study : Valuing the AOL-Time Warner Merger
 Time Warner(Pre-Merger)
 In 1923, two entrepreneurs, Henry Luce and Britton
Hadden launched Time magazine.
 The history merger in 1989 of Time, Inc., and Warner
Communications created the world’s largest media,
information, and entertainment company.
 Dec 2000, Time Warner, Inc., had become a world leader
in media, entertainment, news and information delivery,
and broadband infrastructure.
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Case Study : Valuing the AOL-Time Warner Merger
 Time Warner(Pre-Merger)
 Six major line of business:
• Publishing, Time, Inc., created and distributed publishing and
information brands, including brand-name magazine(e.g.,
Time, Fortune, Money, People, Sports Illustrated)
• Music. As part of one of the world’s five largest record
companies, Warner Music Group artists like Madonna and
Cher recorded music on brand-name labels Atlantic, Elektra,
Warner Bros. Music.
• Filmed entertainment like Warner Bros, New Line Cinema,
and Castle Rock was a world leader in the creation,
distribution, licensing, and marketing of movies, television
programming, videos, and related products.
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Case Study : Valuing the AOL-Time Warner Merger
 Time Warner(Pre-Merger)
 Six major line of business:
• Cable Networks like Turner Broadcasting, TNT, Cartoon
Network, HOB, Cinemax, and etc.
• Cable Systems was the second largest cable operator in the
United States.
• Digital Media, managed all of the company’s integrated
internet-related and digital media businesses.
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Case Study : Valuing the AOL-Time Warner Merger






The AOL Time Warner merger was completed on January
11, 2001. Was the merger a good idea? Did the AOL
stockholders receive value? did the Time Warner
stockholders receive value?
Do you believe that the new company will be a success? If
so, how will value be created in the short term? The long
term?
What could go wrong with this "mega merger?" What are
the most significant threats on the horizon for AOL Time
Warner?
Do you believe that the company will achieve its aggressive
goals for 2001?
What advice do you have for AOL Time Warner executives
in 2001?
What actually happened?
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Chapter Summary
 The following questions can be used by executives to
evaluate current and evolving business models :
 What business model/models is your organization using
today?
 Does your business infrastructure enable you to evolve
your business model to increase revenues generated per
customer and to respond quickly to opportunities and
threats?
 Do you have the capabilities and resources that you need
today and in the future?
 How will you build capabilities and acquire resources to
reduce gaps?
 Are you delivering benefits to all stakeholders? Can you
demonstrate and communicate those benefits in way that
are objective and easy to evaluate and measure?
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