EC10: L11 New Media

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EC10 L11 New Media

• What it takes to build a successful Venture Team

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L11 New Media Outline

• E-Business
• Digital Market Convergence
• CRM Integration
• Extranets

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1. E-Business

• EC10 Innovation Commercialisation

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Advantages to SMEs

• Increase selling power by shortening procurement
  cycles through the use of online catalogues,
  ordering and payment.
• Cut costs on stock and manufactured goods through
  competitive bidding.
• Provide new information and communication
  channels to keep abreast of new developments.
• Potential to reduce development cycles and
  accelerate time-to-market through collaborative
  product implementation.
• Ability to exploit a new global market at a
  fraction of traditional methods, through new
  forms of advertising and marketing.
• Ensure product, marketing information and prices
  are always kept up to date.
• Improve and increase communication with staff,
  supplier and customers via e-mail and document
  sharing. Currie (2000)

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Definitions

• Doing business electronically. Oracle
• This may include the exchange of goods, services
  or information and the technology infrastructure
  to support this process.
• Electronic commerce is the exchange of
  information across electronic networks, at any
  stage in the supply chain, whether within an
  organisation, between businesses, between
  business and consumers, or between the public and
  private sectors, whether paid or unpaid DTI

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Working Definition

• e-business is "a secure, flexible and integrated
  approach to delivering differentiated business
  value by combining the systems and processes that
  run core business operations with the simplicity
  and reach made possible by Internet technology.
  
• This definition means that e-business is more
  than just a Web shop on the Internet
• E-business is also distinct from e-commerce.
  This is trading on-line and is associated with a
  transactional Internet Site.  E-commerce is
  invoicing and order processing and it is part of
  the mechanics of running a (Business to Customer)
  business efficiently.
• E-business can reach into every aspect of the
  organisation.
• E-business must "fit" your businesses
  organisation's vision and your team must be
  committed to managing the business change and
  minimising the disturbance it causes.

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E-business

• E-business is e-commerce plus business
  intelligence, CRM, SCM and ERP. Strauss et al
  (2001)
• E-commerce is generally thought of as a subset of
  E-business. It focuses on the marketing and sales
  processes of E-business but does not cover such a
  broad area as E-business.
• E-commerce as a general concept conveying any
  form of business transaction or information
  exchange using information and communication
  technology between companies and their
  customers. Esprit (1997)

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E-Business Toolkit Strategic Imperatives

• Preliminary Questions
• Will e-business affect dramatically the
  competitive landscape in which you trade?
• Are there first mover advantages?
• Is it better to learn from competitors?
• By what means should your business connect
  electronically
• What (efficiency) role does e-commerce play in
  supplier development?
• What (value added) services can it offer?
• What Internal and external resources do you have
  and do you need to respond?

(Refer to Awareness)
Selecting Markets
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Toolkit Selecting Markets Electronically

• List the information sources that you have and
  identify the missing information components you
  still need.
• Are you intending to research in-house or
  contract out?
• Can you pilot this approach of market and
  customer selection?

Refer to Selecting Markets
Creating Awareness
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Toolkit Validating The Business Model

• How strong is your brand
• value chain
• core values,
• Message and presentation
• Awareness.
• How are strategy, operations, engineering,
  customer services and RD linked into a system
  that enables (or prevents) new business products
  or services being brought to market?
• How should current management practices and
  current innovation practices be changed to
  accommodate e-business?
• Will a combination of enabling technologies with
  new business models create breakthroughs?
• What are the key external factors and
  relationships that lead to success?
• Is it possible to benchmark against one or more
  companies that has succeeded and/or failed to
  introduce e-business?

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Toolkit Marketing Check List

• Online form for customer/market research
• Analyse information on customer profiles and
  buying patterns
• Access to web site visitor statistics
• Forecast customer and supplier demand
• Involve customers in product development
• Share information throughout company and
  employees
• Share information with specific customers,
  suppliers partners
• Recruit potential employees
• Help to communicate with, and train, existing
  staff/employees

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Toolkit Promotions Checklist

• Promote company services and products.
• Provide online form for sales enquiries or leads.
• Provide product information dependent on visitor
  status.
• Provide pricing information dependent on visitor
  status.

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Toolkit Order Fulfilment

• Decide which, if any customers can order products
  on-line.
• End-users.
• Representatives.
• Partner Organisations.
• Online order payment using
• electronic banking transfers.
• credit card processing.
• Customers will be able to place multiple orders?
• Allow customer to enter order directly into
  internal (just-in-time) systems.
• Allow customer to track order status.
• Dispatch product from web site
• Directly
• Through Electronic Link to third party dispatch

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Toolkit After-sales service

• Provide online help and customer service
  facilities.
• Provide a FAQ list of common customers' queries.
• Provide an online knowledge base for customers to
  search/query.
• Online form for customer feedback and comments.
• Provide discussion groups or mailing lists for
  overseas distributors.
• Management
• Outsource web design, fulfilment and logistics to
  specialist.
• Retain function in-house.

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2. Digital Market Convergence
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Electronic Business Content

• The Internet is a world-wide experimental lab,
  where new technologies, applications, products
  and services are being tested. Barriers to entry
  are low, enabling a huge variety of small-scale
  enterprise and innovation in marketing and
  advertising, sales and distribution. This
  experimentation plays on the many-to-many
  features of the medium. 
• Business has been quick to adopt ICT and the
  Internet as strategic elements of
  competitiveness. Internally, ICT is used to
  enhance communications within and among
  functional areas such as sales, marketing, RD
  and production. Companies have used ICT to
  better interact with their suppliers and
  partners, and have been able to drastically
  reduce inventories through "just-in-time"
  production methods. Similarly, the way in which
  companies interact with consumers is changing.
  The banking sector, for example, has extensively
  used ICT to change the way it does business with
  the customer. (OECD The Economics of The
  Information Society, March 1999)

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Electronic Business Content

• Two areas of growth  
• Internal Effeciency - Economic activity around
  building the information communications
  infrastructure, including hardware in the form of
  computers, routers and fibre optic cable. 
• External Effectiveness - Content and customer
  services -- the new "knowledge industries" -- are
  the key areas of long run growth. Indeed,
  knowledge is now recognised as being at least as
  important as physical capital, labour and natural
  resources, as a force driving growth, embedded in
  the structure of a production process, in the
  value-added capabilities of a product, in
  organisational structure, and in strategy.
  Innovation as a stated objective of a companys
  operation is a key characteristic of the GIS.

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Infrastructure Linkages In the Economy
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European E-business Landscape (1)

• Convergence
• Convergence impacts on the disruptive use of
  technology and media. Throughout Europe and
  especially in Scandinavia, government agencies
  recognise the importance of new entrants who
  encourage dynamic and competitive growth.
  Arguably this has not happened in Germany and in
  Spain and this, in part explains their poor
  showing.
• Critical Mass
• E-business do not exist in isolation. They are
  the central part of a value chain. On the supply
  side they rely on having a communications
  backbone and ICT suppliers who they can work with
  to distribute digital content.
• On the demand side, the indigenous population
  must have the means and the intent to consume
  whatever content is produced. It is also
  important that key industries such as financial
  sector, entertainment, education and health
  exist. If any of these components are missing the
  creative cluster is unlikely to achieve critical
  mass eg in Italy the country consists of smaller
  industries. Here traditional sectors like
  publishing are undergoing a transformation, in
  response to growing demand and a threat from
  non-Italian entrants.
• The implication is that a thriving cluster is
  based on external industry linkages being
  established and cultivated. Countries like
  Finland have deregulated communications and media
  distribution industries meaning the population,
  even in the remoteness of areas, has access to
  broadband. Alongside this, computers and other
  digital media are readily available, meaning
  there is little resistance to consuming digital
  content. Poland and Spain are in the final
  stages of deregulation although neither country
  yet has a high level of penetration of PC.

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The European Landscape (2)

• Core companies
• Along with digital convergence comes
  consolidation. This occurs across industry levels
  and across national boundaries. Some smaller
  countries like Netherlands, Belgium and Denmark
  take advantage of this by allowing US and
  European media companies to work alongside their
  own indigenous operators.
• The larger transnational European broadcast and
  media companies drive demand. Core companies are
  vertically integrated and they link across Europe
  and the world like a spiders web. The core
  companies are critical to gaining market access.
• This means a few European companies hold the key
  to gaining market entry. Example Bonnier, a
  family owned Swedish company with 71 subsidiaries
  and extensive reach throughout the Nordic
  countries and Eastern Europe.
• The core companies are surrounded by a ring of
  specialist SMEs suppliers. In effect the core
  companies use the innovation of the SMEs to
  devise and deliver new applications.
• For companies seeking to enter new (European)
  country markets, the choice exists to work either
  with the core companies or to form Strategic
  Business alliances with specialist SMEs, that
  already operate woithin the sphere of the core
  companies. Both stratgeies are designed to gian
  a foothold with the main market players and
  indicate the synergistic relationship that
  continues to exist between the smaller innovators
  and the larger distributors of digital content.

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European Landscape (3)

• Cultural Adaptation
• Localisation of content is endemic across Europe
  and offers opportunities to make content and
  delivery suitable for local groups of consumers.
• Licensing in and licensing out is closely
  associated with partnering and joint ventures.
  Traditional forms of exporting involve
  appointing distributors or agents. These are
  lower priority methods than the alternative
  peer-to-peer methods of entry. Whilst these may
  be common in Nordic countries, UK based cottish
  companies may be less inclined to use them.
  However it is difficult for the uninitiated new
  entrant to devise a route maps to forming
  alliances.
• Strategically, the markets of southern Europe,
  offer the most opportunities.

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Difficulties for Emergent industries

• Newly formed or reformed industries, created by
  technology innovations, shifts in relative cost
  relationships, emergence of new consumer needs or
  economic and social changes.
• The rules are that there are no rules.
• The Environment
• Technological uncertainty, strategic uncertainty,
  initial high costs but steep cost reduction
• Adoption rates Buyers of emerging technology are
  inexperienced.
• Need to induce substitution, inform about
  functions and overcome perceived risks.
• Short time planning horizons

Porter, Competitive Strategy, Collier Macmillan
Publishers, 1980, pp237 -253
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Planning Problems For Early Entrants

• Inability to secure supply lines maintain
  quality
• Escalation of material prices labour costs
• Absence of infrastructure channel, servicing,
  complementary products
• Absence of standardisation and regulatory
  framework
• Perceived likelihood of obsolesce
• Image credibility with Financial Community
• Response of (entrenched) companies
• Cost of Failure
• Introduction of incentives to switch costs

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Europe Convergence

• The potential size of the European multimedia
  market is considerable, rivalled only by the USA
  and Japan.
• Compared to most parts of the world, Europe
  starts with good quality telephone networks and a
  high penetration of cable television and personal
  computers.
• Europe has a strong tradition of public service
  broadcasting and produces some high-quality
  programming.

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Challenge of Integration

• Europe is a heterogeneous market in which almost
  every country has a different language which will
  make it difficult to develop pan-European
  multimedia applications.
• Europe is a fragmented market in cultural terms
  and developments in teleworking or electronic
  commerce may well work out very differently in
  different countries.
• The regulatory and legal frameworks governing
  industries like telecommunications and
  broadcasting are different in the various
  countries of Europe.
• The European Commission is very active in the
  fields of telecommunications, broadcasting and
  the new multimedia and it has established an
  Information Society Forum to examine the social
  implications of these developments.

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3. CRM Integration
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E-CRM

• The use of IT to provide customer interactions
  with reduced, human intermediation on the
  supplier side. eCRM consists of three elements
• The use of direct-to-customer channels,
  principally email and Web
• Emerging channels such as WAP, intranets, portals
  and personalised management systems
• Using IT to select relevant material to be
  presented to the customer, in terms of content,
  offers and support information.

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Direct to Customer Channel

• (DTC) channels provides a means for
  customer-facing enterprises to communicate with
  their customers more cheaply, instantaneously and
  repeatedly.
• It acts as an enabler for automated systems,
  links clicked in emails, items viewed but not
  purchased in online stores etc

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On-line Integration

• One-to-One
• Each company, buyer or seller treats each partner
  as a discrete entity and all communications and
  processes modelled accordingly. (Electronic Data
  Interchange (EDI)
• One-to-Many
• Several SMEs can combine their purchase
  requirements with a view to increasing supply
  chain efficiencies accomplished through more
  economical purchases. Virtual marketplace is
  needed. infomediary.
• Many-to-Many
• In an anonymous manner, a prospective SME buyer
  posts to a market a desired requirement. The
  posting may be a simple order, or may include
  some engineer-to-order or make-to-order elements
  such as product specification or certification
  requirements.
• 4. Peer-to-Peer
• Connections are like tunnels that were closed
  making each tunnel independent. Peer-to-Peer has
  been called the Napsterisation of the supply
  chain. This technology did not need a central
  server. Each peer operates independently and in
  an open manner. White, 2003

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4. Extranets
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4. Intra Extranets

• An Intranet gives staff within a company the
  means to access company critical information.
• An extranet extends this access to customers,
  suppliers and trade partners. In effect extranets
  are a marketing tool that develop the
  collaboration and knowledge sharing aspect of
  intranet onto a new level.

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Extranet Applications

• 1. Web-based Discussion Forums
• 2. On-line Polls
• 3. Company Forms
• 4. Policy Procedure Manuals
• 5. Live Chat
• 6. Phone Directory