The Institute of Finance Management

E-Business Operations
ITU 08509
business. technology. society.

Third Year BAC, BBF and BTX

Mugyabuso, M.L.
2024-2025
Copyright © 2007 Pearson Education, Inc. Slide 1-1
 Lecture 2:
E-Business and E-commerce
Business Models and Strategic
Planning.

Copyright © 2007 Pearson Education, Inc. Slide 1-2

 PART 1. (Lect 2.1)
E-Business Models and
Concepts

Copyright © 2007 Pearson Education, Inc. Slide 2-3

Expected Learning Outcome from the
Lectures 2.1 & 2.2

Develop a deep understanding of various e-business

models and how to design effective strategies for their
implementation.

Slide 2-4
E-commerce Business Models—Definitions

 Business model
 Set of planned activities designed to result in a
profit in a marketplace
 Business plan
 Describes a firm’s business model
 E-commerce business model
 Uses/leverages unique qualities of Internet and
Web

Slide 2-5
Key Ingredients of a Business Model

Slide 2-6
Value Proposition
 Defines how a company’s product or service
fulfills the needs of customers
 Questions to ask:
 Why will customers choose to do business with
your firm instead of another?
 What will your firm provide that others do not or
cannot?
 Examples of successful value propositions:
 Personalization/customization
 Reduction of product search, price discovery costs
 Facilitation of transactions by managing product
delivery
Slide 2-7
Revenue Model
 Describes how the firm will earn revenue,
generate profits, and produce a superior
return on invested capital
 Major types:
 Advertising revenue model
 Subscription revenue model
 Transaction fee revenue model
 Sales revenue model
 Affiliate revenue model

Slide 2-8
Market Opportunity
 Refers to a company’s intended marketspace
and the overall potential financial
opportunities available to the firm in that
marketspace
 Marketspace: area of actual or potential
commercial value in which company intends to
operate
 Realistic market opportunity: defined by revenue
potential in each of market niches in which
company hopes to compete

Slide 2-9
Competitive Environment
 Refers to the other companies selling similar
products and operating in the same
marketspace
 Influenced by:
 how many competitors are active
 how large their operations are
 the market share for each competitor
 how profitable these firms are
 how they price their products
 Includes both direct competitors and indirect
competitors

Slide 2-10
Competitive Advantage
 Achieved when a firm can produce a superior
product and/or bring product to market at a
lower price than most, or all, of competitors
 Types of competitive advantage include:
 First mover advantage
 Unfair competitive advantage

Slide 2-11
Market Strategy
 Plan that details how a company intends to
enter a new market and attract customers
 Best business concepts will fail if not properly
marketed to potential customers

Slide 2-12
Organizational Development
 Describes how the company will organize the
work that needs to be accomplished
 Work is typically divided into functional
departments
 Move from generalists to specialists as
company grows

Slide 2-13
Management Team
 Employees of the company responsible for
making the business model work
 Strong management team gives instant
credibility to outside investors
 Strong management team may not be able to
salvage a weak business model, but should
be able to change the model and redefine the
business as it becomes necessary

Slide 2-14
Categorizing E-Business Models: Some
Difficulties
 No one correct way
 We categorize business models according to
e-business sector (B2C, B2B, C2C)
 Type of e-business technology used can also
affect classification of a business model
 Some companies use multiple business
models

Slide 2-15
B2C Business Models: E-tailer
 Online version of traditional retailer
 Types include:
 Virtual merchants
 Bricks-and-clicks
 Catalog merchants
 Manufacturer-direct

Slide 2-16
B2C Business Models: Other types

 Transaction Brokers
 Market Creators
 Service Providers
 Community Providers
 Portal
 Content Provider

Slide 2-17
B2B Business Models: E-distributor

 Supplies products and services directly to

individual businesses
 Owned by one company seeking to serve
many customers
 Example: Grainger.com, sarafu.com

Slide 2-18
B2B Business Models: Other types
 E-Procurement
 Exchange
 Industry Consortia
 Private Industrial Network

 B2B service provider is one type

 Application service providers: a subset of
B2B service providers

Slide 2-19
Business Models in Emerging E-Business
Areas
 Consumer-to-Consumer (C2C): Provides a
way for consumers to sell to each other, with
the help of an online marketmaker
 Peer-to-Peer (P2P): Links users, enabling
them to share files and common resources
without a common server
 M-commerce: business models that use
wireless technologies
 m-commerce was a disappointment in the United
States; however, technology platform continues to
evolve.
 In Tanzania, most people are enjoying the power
of Apps.
Slide 2-20
How the Internet and the Web Change
Business: Strategy, Structure, and Process
 E-business changes the nature of players in
an industry and their relative bargaining
power by changing:
 the basis of competition among rivals
 the barriers to entry
 the threat of new substitute products
 the strength of suppliers
 the bargaining power of buyers

Slide 2-21
Industry Value Chains

 Set of activities performed in an industry by

suppliers, manufacturers, transporters,
distributors, and retailers that transform raw
inputs into final products and services
 Reduces the cost of information and other
transactional costs

Slide 2-22
E-business and Industry Value Chains

Slide 2-23
E-business and Firm Value Chains
 Set of activities that a firm engages
in to create final products from raw
inputs
 Increases operational efficiency

Slide 2-24
Firm Value Webs

 Networked business ecosystem that uses

Internet technology to coordinate the value
chains of business partners within an
industry, or within a group of firms
 Coordinates a firm’s suppliers with its own
production needs using an Internet-based
supply chain management system

Slide 2-25
Internet-Enabled Value Web

Slide 2-26
Technology and E-business in Business
Model Perspective
Business Roles of Information Systems (IS)
in E-Business Models.
 Information systems provide a robust framework
for the collection, processing, and analysis of
data, converting raw data into actionable
insights. These insights empower managers and
business leaders to make informed decisions,
accurately forecast future trends, and devise effective
strategies.
 Three main roles
 Support Competitive Advantage.
 Support Business Decision Making.
 Support of Business Processes and Operations. Slide 1-27
Next:

Business Strategy (Strategic Planning)

Slide 2-28
Class Discussion / Tutorial Questions

1) Identify and compare key e-business models

(B2B, B2C, C2C, C2B, etc.) and their application in
different industries.
2) Develop strategic e-business plans, considering market
analysis, value proposition, revenue models, and
competitive strategies.
3) Evaluate the effectiveness of e-business models in
different business scenarios and recommend appropriate
adaptations for improvement.

Slide 1-29