What’s Happening!?
Maybe a war with Iraq.
Microsoft hiring push.
ATP clinic this evening at 5:15 in the Baskin lounge area
with Kim Glesser and myself.
First exam Feb. 4 (T) and papers are due Feb. 6 (TH)
Toastmasters at 4:15 in room 360.
ATP Tips
Intel – PC Component Industry
Sun – Internet Hardware and Software Industry
Cisco – Telecommunications Equipment Industry
Knight-Ridder – Newspaper Publishing Industry (but!)
Dell – PC Segment of the Computer Industry
Microsoft – Personal and Business Software Industry
as a segment of the computer software industry
Agilent – Test and Measurement Industry
Oracle – Database and Enterprise Application Software
Chapter 3
The Porter Competitive Model for
Industry Structure Analysis
Key Objectives
Provide an understanding and appreciation for
the use of the following models:
– Porter Competitive Model
– Value Chain
Porter Competitive Model
Potential
New Entrants
Bargaining
Power
of Suppliers
Intra-Industry
Rivalry
Strategic Business Unit
Bargaining
Power
of Buyers
Substitute
Products
and Services
Source: Michael E. Porter
“Forces Governing Competition in Industry
Harvard Business Review, Mar.-Apr. 1979
Figure 3-1
Key Questions
1.
2.
3.
How significant is the structure of the industry to
existing companies and possible new entrants or
providers of substitute products or services?
What is the company’s relative position within the
industry?
What does this suggest as a logical strategy for a
company to strengthen its position within an
industry?
Strategic Business Unit:
Two Basic Objectives
1.
To create effective links with buyers and
suppliers.
2.
To build barriers to new entrants and
substitute products or services.
The Strategic Business Unit and
Competitive Strategies
Primary Strategies
Differentiation
Low-cost
Supporting Strategies
Innovation
Growth
Alliance
SUPPORT ACTIVITIES
Generic Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND
LOGISTICS
OPERATIONS OUTBOUND
LOGISTICS
MARKETING
AND SALES
SERVICE
PRIMARY ACTIVITIES
Adapted with the permission of the Free Press, an imprint of Simon & Schuster Inc.. from
COMPETITIVE ADVANTAGE: Creating and Sustaining Superior Performance by Michael Porter. Copyright
© 1985 by Michael E. Porter.
Figure 3-6
Main Objective of Value Chain
To maximize value-adding activities
while minimizing those that do not
add value to the customer.
Possible Exam Questions
1.
Identify and explain the two primary strategies
and the three supporting strategies that a
company can choose from when attempting to
achieve a competitive advantage. Explain
challenges to accomplish the successful
implementation of each of these strategies.
2.
Explain how the value chain can be used to focus
the potential for Information Technology in a
given company.
Chapter 4 Summary
Porter Competitive Model
and
the Airline Industry
Major Chapter Topics
1. Hard Times for the Airlines
2. Business Strategy Model
3. Industry Rivalry
4. Industry Factors
5. Porter Competitive Model
6. Benefits of IS to American Airlines
7. Airline Industry Value Chain
Porter Competitive Model
Airline Industry Analysis - North American Market
•Aircraft Manufacturers
•Aircraft Leasing Companies
•Labor Unions
•Food Service Companies
•Fuel Companies
•Airports
•Local Transportation Service
•FAA
•IT Vendors
Bargaining
Power
of Suppliers
•Alternate Travel Services
•Fast Trains
•Boats
•Private Transportation
•Videoconferencing
•Groupware
Potential
New Entrants
•Foreign Carriers
•Regional Carrier Start ups
•Cargo Carrier Business Strategy Change
Intra-Industry Rivalry
SBU: American Airlines
Rivals: United, Delta, US Air,
Northwest, Southwest
Substitute
Products
and Services
Bargaining
Power of Buyers
•Travel Agents
•Business Travelers
•Federal Government
•Pleasure Travelers
•Charter Service
•U.S. Military
•Cargo and Mail
Figure 4-2
Industry Rivalry
SBU: American Airlines
Rivals: Carriers similar in operation
All with hub-and- United
spoke route structures
- Delta
and in varying degrees
of serious financial
- Northwest
trouble
Airlines with different strategies
- Singapore Airlines: international
emphasis
- Southwest: least cost, point-to-point
city pairs strategy
Both doing better
financially
Bargaining Power of Buyers





The airline industry traditionally had two tiers of buyers:
travel agents and actual passengers. Online systems are
reducing the role and power of travel agents.
People fly for business or personal reasons with business
passengers representing 80% of passenger miles flown.
Passengers have little power other than picking a competitor.
What do you think American said to IBM when they offered
to have their employees fly exclusively on American if given
a discount on fares?
An exception to this are government employees who get a
significant discount on fares.
Bargaining Power of Suppliers
Aircraft manufacturers, aircraft leasing companies, fuel
suppliers, food vendors, labor unions, airport operators,
FAA and IT vendors are major suppliers to the Airline
Industry. The power implications span a wide range.
Airlines have power in negotiating with aircraft
manufacturers, leasing companies, fuel and food
vendors and IT vendors.
The tables are turned relative to labor unions, airport
operators and the FAA who retain significant power.
Potential New Entrants
Despite the lack of good financial performance in the case
of many airlines there is still the treat of new entrants.
The US is the world’s largest airline market and foreign carrier
would clearly like more access to US routes.
There is also the threat of new startup airlines or companies like
UPS deciding to shift their business strategy and focus on
passenger travel.
Substitutes
There are multiple alternatives to deal with travel
demands as options of dealing with other than the SBU
and its rivals..
If time is a major consideration, substitutes are generally
not a viable option in a country the size of the US.
Porter Competitive Model Analysis
Conclusions
The industry represents intense rivalry among existing
carriers and faces a major threat by discount airlines who are
picking off high volume routes. The bargaining power of
buyers is not a major influencing factor at least to date.
Suppliers like unions, airport operators and the FAA have
significant power in their relationship with airlines. Other
suppliers of commodity items like food and fuel have no
significant power which is also the case for IT vendors
because there is so much competition for airline business.
So, why with all this failure, do
some airlines succeed?

Southwest Airlines: short-haul, point-topoint, least cost of operations.

Singapore Airlines: central location in
Asia, national strategies, good IT
infrastructure.
Business Strategy Model - Airline Industry
Scheduled
Passengers
PRODUCT/SERVICES
Charter
Cargo
Services
Mail
Air Express
MARKETS
Europe
North American
Pacific Rim
Latin American
ROUTES AND ROUTE STRUCTURE
Short Haul
Hub and Spoke
Long Haul
Point to Point
FARE STRATEGY
Modified compared
to the example in
the textbook.
Low Fare
Premium Fare
COMPANY STRUCTURE
Independent
Alliances
INFORMATION SYSTEMS FOCUS
Passengers
Operations
Logistics
Business
Figure 4-1
IT as a Vital Competitive
Advantage
Information Technology serves to give
carriers the edge over its competitors
through customer convenience, gaining
knowledge of customers, operational
efficiencies and cost savings due to the
volume of tasks needed to be performed.
Possible Exam Questions!
1.
How can the Porter Value Chain be
effectively used within the contents of our
Analysis Term Papers?
2.
Does the projection that Southwest will be
the largest airline in the US in the future
really make sense or does this contradict the
importance of the roles played by major
carriers and feeder airline to service
thousands of US cities?
Chapter 5 Introduction
Information Systems Can Redefine
Competitive Boundaries
Objectives of the Chapter

How does IS help to redefine competitive
boundaries?

What forms of IS are used to redefine these
boundaries?
IS Extends a Company’s
Capabilities

Creates interorganizational systems

Allows for changes in business processes
with customers and suppliers

Supports strategic business alliances
Interorganizational Systems
Customers
Vendors
Your Company
Support Services
Business Partners
Industry Forces
Government
Associations
Info Sources
Competitors
Figure 5-1
EDI Applications
Purchase
Orders
Invoices
Electronic
Data
Interchange
Advance
Shipping
Notices
Inventory/
Sales Data
Freight Bills
Figure 5-3
EDI System Obstacles
Data
Communications
Applications
• Company data versus standards
• Cross-industry standards
• Standards administration
• Time zones and windows
• Communication protocols
• Telecommunications equipment
•Service cost and balance
• Integration
• Features and function supported
• Interface
Figure 5-4
Electronic Data Interchange (EDI)
Through the Use of a VAN (ASP)
Electronic
Mailbox
Vendor Systems:
Mainframes
Customer Order
• Time Schedule
• Data Format
• Communication
Protocols
• Data Transmission
Minicomputers
Microprocessors
Speed
No computer
Conversion/Translation
Figure 5-5
Other Examples of IS Used

E-mail enabled applications

The Internet
Conclusions



IS is not only used to make a company more
efficient or effective, but it’s also used to gain a
competitive advantage.
IS allows for interorganizational systems, changes
in business processes with customers and suppliers
and also supports strategic business alliances.
Examples of IS used to redefine competitive
boundaries include EDI systems, e-mail enabled
applications, and the Internet.
Chapter 5
Information Systems Can
Redefine Competitive
Boundaries
Chapter Questions
1. Which word—global, international or interdependent—best
describes current markets, products and services, and
business relationships?
2. Why is growth such an important part of business success?
3. What is an extended enterprise and why is it an important
competitive consideration? (What terms are currently more
commonly used to described an extended enterprise?)
4. What role does information technology play relative to an
extended enterprise?
5. Do strategic alliances really work and if so, why?
6. What are examples of EDI and an E-mail enabled
application?
Chapter Topics
A. Interorganizational Systems
B. Strategic Business Alliances
C. Electronic Data Interchange (EDI)
(extranets versus EDI?)
With an added dose of globalization.
Topic A
Interorganizational Systems are defined as
automated information systems shared by two
or more companies.




Enhance business relationships.
Establish strategic alliances.
Gain efficiencies.
Lower cost of doing business.
Interorganizational System
Goals

Efficiency.

Effectiveness

Competitive Advantage
Competitive Advantage
Advantage can be gained through better customer
service that accrues from inter-organizational
systems.
Customer Satisfaction:
– We are available.
– We are interested in you.
– We are responsive.
– You can count on us.
– We want to earn your trust and respect.
Topic B - Strategic Alliances
How (why) do they work?
 Companies bring strengths to the alliance
table.
 Alliances create long term advantages.
 Alliances drive business growth.
 Alliances often are a difficult transition.
Strategic Alliances
Why establish a strategic alliance?
 To build a combined capability that makes it
a stronger competitor.
 Extended enterprise against the competitor’s
extended enterprise.
 Difficult, costly and risky to try to deal with
the challenges of a global business.
Topic C - EDI
Electronic Data Interchange (EDI) (Predecessor to
extranets)
Exchange of routine business transactions in a
structured environment computer-processed
format.
Traditional applications included purchasing,
pricing, scheduling, payments and financial
reporting.
EDI Examples
Boeing
Parts Logistic System: Provides information
regarding parts availability to support
aircraft maintenance.
 Links with contractors in Japan and U.S.

Charles Schwab

Trading systems that connect to stock
exchange systems.
EDI Value-Added Network Services
(Would probably be called an ISP or ASP today)
Two major elements:
 Telecommunications network.
 EDI application translation support.
Connects Trading partners:
 Broad range of geographic locations.
 Provides network management-multiple routing
paths and security.
The Benefits of a VAN (ISP or
ASP)




Having 24-hour service on demand.
Gaining access to national and international
networks to connect to trading partners.
Support for multiple telecommunications protocol
conversions.
Interchange support for even a smaller number of
transactions, since you only pay for the services
that you actually use.
Boundaries
Across town?
Customers?
Throughout the state?
Suppliers?
Across multiple US regions?
Support Service Providers?
Encompassing the entire US?
Business Partners?
North America?
Industry Forces, Associations,
Government?
Western Hemisphere?
Multiple Continents?
Total World?
Mobile employees relative to
the above?
Devices Mobile Professionals Expect
to Use within 12 Months
Laptop
Handheld Device
Non-Internet Mobile Phone
Internnet Mobile Phone
2 Way Pager
PC Companion
Smart Telephone
0
20
40
60
Percentages
80
100
Globalization Drivers
• Customers are global.
• Channels are global.
• The marketplace is global.
• Products that travel.
Information Technology and
Globalization
Drivers of
Change
Competitive
Environment
Globalization
“Products
that travel”
Emerging
Global
Markets
Information
Technology
Transportation
Technology
Business/IT
Strategy
Business
Implementation
Internetworking
The Global
Enterprise
Global Business
Operations &
Alliances
Global Motivation
Offense/Defense—Opportunities/Threats
Global economies of scale to recoup R&D and capital costs.
Build and strengthen global brands—economies of scope.
If your competitors have established a global position do you
really have a choice as to whether you should also compete
on a global basis?
Acknowledge the better standard of living and increased
mobility of a greater number of people in countries around
the world.
Therefore
1. Grasp the opportunities and challenges of the
global marketplace.
2. Generate and focus the personal skills and
organizational energies needed to attack the
global opportunities and challenges.
3. Transform these efforts into world-class
performance.
The Best Term?
• Global
• International
• Interdependent
IOS Conclusions
• Successful small information systems
tend to grow into larger systems.
• Interorganizational systems are
changing business processes, strategies
and relationships.
Increased Competitiveness
Better customer service.
 Higher customer satisfaction.
 Improved communication with business
partners.
 Strengthened alliances.
 Increased competitive advantage.

Global Leadership
Culture
Business
Acumen
Relationship
Management
Personal
Effectiveness
Organizational
Structure and
Core Processes
Performance
Evaluation
A Sobering Thought
“It takes at least 25 years to build an effective
global management team.”
Alfred Zeien
Former CEO, Gillette
Changes in Concepts, Terminology and
Networks
Interorganizational Systems:
• E-Business and E-Commerce
• Core Processes and Outsourcing
• Business Alliances
• Internet as a global, standardized network
Scope
E-Commerce versus E-Business.
Front end versus business strategies, core business
processes, policies and practices geared to succeed
with an E-Commerce approach.
Dell Computer
Occasionally, rarely, history is made when a gifted
leader, who has a vision of new processes and
technologies, produces a brilliant new business
model. Henry Ford did it in automobiles and
Michael Dell has done the same in PCs. The
parallels are remarkable.
Jacques A. Nasser
Former President and CEO
Ford Motor Company
Ford and Dell?
Appreciated the principle of elasticity of demand.
Emphasized innovation in manufacturing.
Vertically integrated. (Ford in-house, Dell outsource)
Stressed standardization and modularity of product.
Passed cost savings along to the customer.
Stressed innovation with a product in a relatively new
industry that fundamentally changed the industry.
The popular, low cost product had a major impact on
existing products that offered similar function.
The products also had a societal impact.
Dell Computer
Dell Computer is a great American success story. In 2001
Dell became the No. 1 PC manufacturer in the U.S. and the
world.
This all happened because Michael Dell started selling
computers from his dormitory room while he was a student
at the University of Texas. When he consistently grossed
$30,000 a month he concluded that he was onto a business
opportunity that was too good to pass up.
He quit school as a pre-med student and founded Dell
Computer in May 1984.
Direct Business Model
Dell was a pioneer and has become the leader of the
customer-direct, build-to-order computer systems
business.
Its financial success stems from developing and
implementing strategies designed to maximize the
strengths of the direct business model.
Virtual Integration
Interweaving distinct businesses so that partners
are treated as if they are inside the company.
(A major emphasis on outsourcing non-core
business processes)
Dell Business Strategies
1. Speed to market.
2. Superior customer service.
3. A fierce commitment to producing consistently
high quality products.
4. Custom-made computer products that provide the
highest performance and the latest relevant
technology to customers.
5. Early and effective exploitation of the Internet.
Benefits of the Direct Business Model
This business model provides the following
competitive advantages.
1. It bypasses computer dealers and avoids related
price markups.
2. It enables Dell to build each system to a specific
customer order, which eliminates inventories of
finished goods to resellers and enables it to move
faster to new technologies and lower-cost
components.
3. It provides direct contact with thousands of
customers every day to tailor support offerings to
fit customer target markets and to control the
consistency of customer service around the
world.
4. Leveraging its relationships with key technology
partners enables Dell to rapidly incorporate the
most relevant new technologies into its products.
5. The low inventory and low fixed-asset model
results in the highest returns on invested capital in
the computer industry.
Customer Focus
The focused vision made Dell the world's leading
direct computer systems company, with 29,300
employees in 33 countries around the globe. A bold
concept—direct customer contact—has made Dell
one of the most successful companies in the world.
Nearly two-thirds of Dell's sales are to large
corporations, government agencies and educational
institutions. Dell also serves medium and small
businesses and home PC users.
What About Financial
Performance?
Dell has consistently led the computer industry in
performance against all three major priorities: growth,
profitability and liquidity.
Competitors won’t just give all the
PC business to Dell!
Several of Dell’s competitors are trying to emulate
characteristics of how Dell operates its PC business.
• IBM ceased selling PCs through retail channels.
• Gateway has traditionally sold direct but also
operates its own retail outlets.
• It is fairly safe to conclude that the HP-Compaq
merger was motivated by an intent to challenge Dell.
Dell and the Internet
If you sat back and said, let’s design a technology that could
radically impact this company in positive ways.
It would be hard to create one better than the Internet. It
essentially puts us that much closer to our customers. It is the
ultimate form of direct for us. Because we were already
dealing directly with our customers, it was a natural extension
for us. We didn’t have to change the way we do business in
order to do business on the Internet. Everything was already
in place. A nice plus is that the Internet lowers the cost of
doing business for us and our customers and it speeds
transactions whether you are talking about sales, support or
customers getting information.
Michael Dell
Dell Premier Web Pages
A tailored web page for major customers that contains:
• Purchasing procedures
• Approved computer configurations
• Negotiated prices
• Purchase authority limits
• Order history and discount levels
This cuts order time, helps decrease order errors, keeps
track of shipment status and has a record of all Dell units
by serial number.
Product Development
Dell employs over 2,000 engineers who focus on
providing leading-edge products.
Strong Business Alliances
1. Exploit the talents and the investments of the experts.
Find out where you can add the most value to your
customers and shareholders and find great partners to
do the rest.
2. Keep things simple. Complicated supplier relationships mean
one thing--complications. Fewer suppliers mean fewer
opportunities for error, less cost, less confusion and greater
consistency. With suppliers, less is really more.
Strong Business Alliances
3. Keep your friends close, and your suppliers closer.
Bringing your suppliers into your business is a hallmark
of virtual integration. Keeping them geographically or
electronically close results in better service, heightened
communication, lower costs and faster time to market.
Strong Business Alliances
4. Invest in your mutual success. Take the time to
communicate your company’s goals and strategies to your
suppliers. There is no benefit to perpetuating the bid-buy
cycle. Your suppliers can’t be a business partner if it
doesn’t know what you are trying to accomplish. The
challenge is to maintain a healthy level of flexibility and
open channels of communication so that suppliers can
provide what customers want and need. Look for
complementary strengths and management styles to ensure
the proper alignment of your goals.
Strong Business Alliances
5. Be explicit, and be objective. Your quality and
defect tolerance must be detailed clearly at the
outset and consistently throughout your
relationship with your suppliers. Use precise
metrics to gauge how well a supplier is meeting
its criteria and create a self-enforcing check and
balance system.
Strong Business Alliances
Creating strong business partnerships with suppliers is
fundamental to the success of your business. But
using them to become a source of competitive
advantage is something else altogether.
Cisco Systems
Implemented Cisco Connection Online (CCO) in 1993 as a
web-based order entry system at a cost of about $3 million.
Wants to be a model user of its own equipment and “its own
network.”
CCO provides twenty-four/seven world access.
Claims to generate 80% of its revenue through CCO.
Serves 1,200 customers exclusively online.
Claims an annual savings of $500 million while increasing
customer satisfaction.
Cisco Web Awards
Cisco Connection Online is ranked #1 in this year's Net
Marketing 200 best business-to-business Web site. The sites
were graded and ranked based on a variety of criteria,
including ease of navigation, design, presentation, and ecommerce capabilities.
The Association of Support Professionals bestowed the Top
Ten Support Site Award upon CCO based on performance,
usability, content, navigation, and appearance.
CCO is Three-time Winner of CIO's 50/50 Award
John Chamber on Cisco
If we do it right, we have a chance to become
one of the most influential companies in
history.
Intel E-Commerce
Intel went from zero to $1 billion per month in six months.
The close connection to Intel's business strategy gives the
IT organization constant feedback on how the products
impact Intel's ability to deliver in the marketplace.
“It was a combination of really smart people, disciplined
management, a strong team ethic, the ability to apply
resources where needed and a culture that lets people
switch gears rapidly.”
Doug Busch, IT Vice President
B2B Time Line
Challenge from Senior Vice President of Sales
in early 1998 to take in $1 Billion in sales
orders via the Web in Q4 1998.
Took first order in July 1998.
Arrived at $1 Billion per month by the start of
Q4 1998.
B2B Readiness
1. Business Strategy
2. B2B Infrastructure
3. Business Processes
4. Application Development
Secondary Readiness
1. B2B External Initiative
2. Trading Partners
3. Solution Provider
4. Legal
5. Security
6. Audit
Need for Standards
They knew that they needed standards.
Did not want standards that would take years to
develop.
Standards needed a sound, extendable architecture;
would have to be adopted rapidly; and would be
demanded by management and supported by business
and technology stakeholders in Intel’s business
environment.
Helped found Rosettanet—a self supporting
organization to develop and support B2B standards.
Links with Suppliers
Before Intel could satisfy its customers' just-in-time
demands, it needed to make its own production capacity
responsive to demand fluctuations and tighten links to its
suppliers.
It assessed the strength of its supply chain at the product
development level by analyzing each supplier's ability to
provide requisite quality and quantities of materials and
equipment.
The company's ongoing effort to innovate often means
signing on emerging companies with breakthrough
products. Reliance on such youthful suppliers can
present logistical challenges: "What if a company is used
to making 1,000 widgets but we need a million when we
go into production?"
Links with Suppliers
To help its suppliers develop products in harmony with
Intel's production needs, the company installed new Webbased tools that allow suppliers to study product drawings
and specifications as Intel engineers draft them.
Intel also uses the Web to post policies and guidelines for
companies seeking the certificates of compliance that Intel
issues to eligible suppliers.
By providing information and forms over the Web, Intel
automated most aspects of the formerly paper-intensive
certification process.
Links with Suppliers
Intel is in the enviable position of being able to
require its suppliers to hold inventory until it's
needed on the factory floor.
Intel works to balance its own inventory reduction
goals with its suppliers' business needs.
Some suppliers initially balk at holding inventory
for Intel, the chip maker helps ease their risk by
showing them how to improve their own
inventory- and demand-forecasting methods.
IS Support
You're only as good as your supply chain.
That commitment to efficiency also extends to the
company's IS practices. Because Intel modifies its
product line at least every 18 months,
manufacturing plants and the IT that supports them
must be nimble.
Intel has instituted a "copy exactly" strategy for
systems that support 18 manufacturing, testing and
assembly sites on three continents.
Identical architecture and applications support
ordering and production planning at every site.
Helping Customers Anticipate
Market Needs
Intel's customers, for the most part PC makers
number in the thousands.
Because they assemble their finished products
from many components with limited shelf life,
OEMs assume the highest risk associated with
inventory obsolescence.
Links with Customers
Lance Van Hooser, director of supply chain integration and
architecture for worldwide procurement at Dell Computer Corp.,
says that the more effectively Intel matches production and
delivery of its microprocessors to Dell's demand, the more Dell's
efficiency improves.
As supply chain communication of inventory, shipment and
promise-to-delivery scheduling data approaches real-time
communication, excess inventory problems will abate, and costs
at every link will fall.
Van Hooser confirms the value of Intel's strategy. "By
optimizing the supply chain, we all win."
Customer Order Confirmation
The improvements Intel has made to its supply
chain are paying off.
The company used to require at least 24 hours
to confirm orders through an overnight batch
system.
Today, Intel is able to confirm delivery dates as
orders are placed.
Basic Business Principle
If there is no payment, there is no business
transaction.
No business transactions translates to no business
revenue.
No business revenue results in a bankrupt
business.
US Consumer Payments
Cash
Checks
Credit Cards
Debit Cards
Other Paper Methods
Electronic Payment
0%
10% 20% 30% 40% 50%
US Payment Systems
$ Purchase Volume
Checks
Cards
Cash
Other
0%
10%
20%
30%
40%
50%
60%
Payment Process Industry
Merchants
Member
Banks
Visa, Mastercard,
Discover, Amex
Cardholders
•Businesses
•Individuals
E-Business Check List
1 REENGINEER YOUR COMPANY
The Internet lets you communicate instantly with every
supplier, partner, and customer--and, in many cases, lets them
communicate with each other.
2 THINK BEYOND THE BOUNDARIES OF THE OLD
BUSINESS MODEL
Ask a very basic question: Just who are you in the Internet
Age? As you face more global competition online and have
to cut your prices, doesn’t it make sense to reexamine your
old business model?
3 REALIZE THAT THE BUYER ALWAYS WINS
Understand that the buyer runs the show on the Net. Up to
now, buyers faced big obstacles to getting the best prices and
service--limited time and data to compare vendors' products
and the cost of dealing with far-flung suppliers. No more.
The anytime-anywhere Net knocks down those barriers.
4 HOLD YOUR CUSTOMER'S HAND
Roll out the red carpet--or whatever the cyber-equivalent is.
You can use some nifty software package that analyzes
purchases and suggests other things the customer might buy.
That kind of software helps sell more to customers at little
extra cost and treats them as individuals. It is called
Customer Relationship Management.
5. OUTSOURCE NON-CORE BUSINESS JOBS
The instant communications power of the Net shatters the
physical-world need to do product development,
manufacturing, distribution, marketing, and customer
management all in-house. There are lots of specialists that
can do everything from hosting our Web site to running
warehouses.
6. NO WEB SITE IS AN DESOLATE ISLAND
In going online, an established brand name and purchasing
power can work to a company’s advantage.
7. CREATE AN ONLINE SENSE OF COMMUNITY
Think global. People all over the world are congregating
into virtual communities on the Web.
8. FOLLOW THE MONEY
The name of the game in the business world is to make a
profit.
9. A WEB OF NERDS? DON'T BELIEVE IT
There are 510 million people online worldwide.
10. GET EXECUTIVES LOGGED ON
Only 25% of CEOs in a recent Price Waterhouse Coopers
survey regularly log on to the Internet. It really helps to get
your fingers on a keyboard every day. This is something you
can't delegate.