MIS 648 Presentation Notes: Lecture 8

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MIS 648 Presentation Notes Lecture 8

• Global Aspects of E-Commerce

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AGENDA

• Goal of the Lecture
• Global Aspects of E-Commerce
• Global Economies of Style
• Cultural Influences

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Goals of the Lecture

• Understand E-commerce as a global phenomenon,
  with global impact and driving forces
• Describe the networked economy as the platform
  for global e-commerce
• Understand the impact of differential
  infrastructure availability on the networked
  economy and hence on global e-commerce
• Speculate about the future of e-commerce and
  properties of marginalization and hollowing out.

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Global Aspects of E-Commerce

• Any business can now transact globally
• This is enabled through the ubiquitous and
  non-proprietary idea of a web browser.
• HTML (and its successors) have empowered
  individuals to access information worldwide
  without proprietary networks and software.
• Competitive advantage is now in the ability to
  capitalize on the capabilities of the ubiquitous
  browser.

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Global Aspects of E-Commerce II

• The new economy is the economy enabled by the
  Internet and the browser with open standards.
• All new economy businesses are global
• Each business can be intermediated and
  disintermediated almost at will.
• Hence business models must be agile and
  businesses must be flexible.

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Global Economies of Style

• Licker, 2005 Presented at the 6th Global
  Information Technology Management World
  Conference, Anchorage, June.
• Major Thesis Global Networked infrastructure
  enables value networks and a new way to compete.
  
• Competing on style means managing a network of
  values delivered through relationships.

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Value Networks

• Achieving Economies of Style and Extracting
  Profit through Agility in a Value Network
• GITMA Anchorage, June 2005

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Agenda

• Supply Chain ? Value Chain
• Value Chain ? Value Network
• Economies of Style
• Moving around the Value Network
• Profit Avoiding commoditization
• Extracting Profit from the Value Network

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The Supply CHAIN
Producer (focal firm)
Supplier
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The Value CHAIN
Gg(S1, S2, Sn) P
VGP
Value is added by distributing the product where
needed or desired
Producer (focal firm
Supplier
Value is added by bringing together supplies
Value is added by creating a product via processes
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The Value NETWORK
Supplier-1
Producer
Supplier-4
Supplier-2
Supplier-3
Buyer-5
Buyer/ Supplier
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Putting the Value in the Value Network
Supplier-1
Producer
Supplier-4
Supplier-2
Supplier-3
Buyer/ Supplier
At any point in this network, value can be added
At any point in this network, value can be added
At any point in this network, value can be added
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Multiple, Volatile Relationships
C
E
A
X
p
D
G
F
B
H
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Relationship Management
ca
C
E
A
ax
ed
X
fd
gf
p
D
G
da
F
bx
fh
B
VALUE NETWORK V1
H
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Economies of Style

• Economy of Scale Reducing variable cost of
  production of product.
• Economy of Scope Reducing variable cost of
  variation in product.
• Economy of Style Reducing variable cost of
  relationship.

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Avoiding Commoditization
Producer (focal firm
Buyer
Supplier

1. Compete on price (economy of scale)
2. Compete on design/differentiation (economy of
   scope)
3. Compete on relationship (economy of style)

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Moving Around the Value Network
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Extracting Profit Around the Value Network
Profit comes from finding buyer for reseller
Profit comes from facilitating supplier alliance
Profit comes from locating supplier for producer
Profit comes from turning buyer into low risk
producer
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Extracting Profit through Economies of Style
Third-order
Second-order
First-order
C
X
E
D
A
B
F
G
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General Principle

• Value network integration means firms can play
  more roles more quickly
• Finding out where value is added and how to
  manage that value-adding process is important
• The more information content to the physical
  product, the more likely it is that agility holds
  the key to increased profit

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Cultural Influences

• Globalization is not automatic, however
• Although the browser is ubiquitous, websites may
  be tuned locally.
• Each culture has its own preferences for style,
  layout, language, symbols, pace, emphasis, and
  especially content.
• There are far too many examples
• These cultural influences might not be fixed.

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Culture Clash and Influences
Presumed World Culture
Business Culture
National Culture
Infrastructure Culture
IT Culture
Specialized Culture
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Major Battleground

• Cultural symbols
• Language (English?)
• Literacy requirements
• Gender taboos
• IT culture symbols, rites, practices
• Consumerism/western culture