Model

A model is a physical, mathematical, or logical representation of a system of entity, or processes. Basically a model is a simplified abstract view of the complex reality.Everyone uses models to make decisions. A model is valuable if it adds value.

Features of Models
Models are usually simplified versions of the things they represent. A valid model accurately represents the relevant characteristics of the object or decision being studied Tailored to specific applications Humans use models to conduct analysis

A description of all products and services the business will offer A description of the business process required to make and deliver the products and services A list of the resources required and the identification of which ones are available, which will be developed in-house, and which will need to be acquired A description of the organization supply chain, including suppliers and other business partners A description of the revenues expected (revenue model), anticipated costs, sources of financing, and estimated profitability (financial viability)

Revenue Models
Description how the company will earn revenue, produce profits, and produce a superior return on invested capital.

Benefits of Modeling
Econom y - it is often less costly to analyze decision problems using models Timeliness - models often deliver needed information more quickly than their real-world counterparts Feasibility - models can be used to do things that would be impossible Models help provide insight & understanding to improve decision making

Major revenue models

Sales Transaction fees Subscription fees Advertising fees Affiliate fees Other revenue sources EC Business Models Value Proposition: Defines how a companys product or service fulfills the needs of customers. Why should the customer buy from you? Market Opportunity: Market opportunity refers to the companys intended marketplace and the overall potential financial opportunities available to the firm in that marketplace. Competitive Environment: Competitive Environment refers to the other companies operating in the same marketplace selling similar product. Competitive advantage: Achieved by a firm when it can produce a superior product or/ and bring the product to market at a lower price than most, or all, of its competitors. Market strategy: The plan you put together that details exactly how you intend to enter a new market and attract new customers. Organizational Development: Organizational Development is the plan that describes how the company will organize the work that needs to be accomplished. Management Team: Employees of the company responsible for making the business model work.

Decisions vs. Outcomes

Good decisions do not always lead to good outcomes.If the route you normally take to work is congested you may (rightly) decide to take an alternate route. If the alternate road is closed you may be late for class (a bad outcome), but that doesnt mean you made a bad decision. A structured, modeling approach to decision making helps us make good decisions, but cant guarantee good outcomes.

Business Models
Business model is a method of doing business by which a company can generate revenue to sustain itself. Business models are a subset of a business plan or a business case. It is a set of planned activities designed to result in a profit in a marketplace. A business model can be defined as architecture for product, service, and information flow, including a description of business players, their roles, and revenue sources.

EC Business Models
E-commerce business model is a business model that aims to use and leverage the unique qualities of the internet and the world wide web.

The Structure of Business Models

A description of the customers to be served and the companys relationships with these customers (customers value proposition).

How does B2C Work?

Visiting the virtual mall Customer registers Customers buys product

Merchant process the order Credit card is processed Operations management Shipment and delivery Customer service After-sales service

Process in B2C
Customer identifies a need Search for the product or service to satisfy the needs Select a vendor and negotiate a price Receive the product or services to satisfy the need Selects a vendor and negotiates a price Receive the product or service Makes payment Gets service and warranty claims

Strategy implementation: The development of detailed, short-term plans for carrying out the projects agreed on in strategy formulation Strategy assessment: The continuous evaluation of progress toward the organizations strategic goals, resulting in corrective action and, if necessary, strategy reformulation. The Role of the Internet in Strategy

Issues in E-Strategy Initiation

Be a first mover or a follower? Born-on-the-net or move-to-the-net? How to determining scope? Have a separate online company? Have a separate online brand?

Issues in Strategy Formulation

Let the established distributors handle ebusiness fulfillment Provide online services to intermediaries (e.g., by building portals for them) and encourage them to reintermediate themselves in other ways Sell some products only online Avoid channel conflict entirely by not selling online.

Major B2C Business Model

Portal: Offer users powerful web search tools as well as an integrated package of content and services all in one place. Content Provider: Distributes information content, such as digital news, music, photos, video, and artwork, over the web Transaction Broker: Site that processes transactions for consumers that are normally handled in person, by phone, or by mail. Market Creator: Builds a digital environment where buyers and sellers can meet, display products, search for products, and establish a price for products. Service Provider: Service providers offer service online. It use a variety of revenue model. Some charge a fee, or monthly subscriptions, while others generate revenue from other sources, such as through advertising. Community Provider: Sites that create a digital online environment where people with similar interests can transact (buy and sell goods); share interest, photos, videos, communicate with likeminded people and receive interest related information.

Strategy Implementation Issues

Should site development be done internally, externally, or by a combination of internal and external development? Should the software application be built or will commercially available software be satisfactory?

If a commercial package will suit, should it be purchased from the vendor or rented from an ASP?
Will the company or an external ISP host the Web site? If hosted externally, who will be responsible for monitoring and maintaining the information and system?

The Objectives of Assessment

Determine if the EC strategy and projects are still viable in the current environment Reassess the initial strategy in order to learn from mistakes and improve future planning Identify failing projects as soon as possible and determine why they failed to avoid the same problems on subsequent projects

E-commerce strategy
The formulation and execution of a vision of how a new or existing company intends to do business electronically

The Strategic Planning Process

Strategy initiation: The initial phase of strategic planning in which the organization examines itself and its environment. Strategy formulation: The development of strategies to exploit opportunities and manage threats in the business environment in light of corporate strengths and weaknesses.

EC in Small and MediumSized Enterprises

Critical Success Factors for SMEs Product is critical Payment methods must be flexible Electronic payments must be secure Capital investment should be kept to a minimum Inventory control is crucial

Critical Success Factors for SMEs Logistics services must be quick and reliable Owner support High visibility on the Internet Join an online community A Web site should provide all of the services needed by consumers

E-business
E-business is the use of the Internet and IT to execute all of the business processes for the firm. E-business includes e-commerce, all internal processes, and coordination with business partners such as customers and suppliers .E-business refers to the use of digital technology and the internet to execute the major business processes in the enterprise. It includes the activities for the internal management of the firm and for coordination with supplier and other business partners. It also includes e-commerce. E-business is the conduct of business on the Internet, in supplychain planning, tracking, fulfillment, invoicing, and payment. It includes buying and selling as well as serving customers and collaborating with business partners. It combines the resources of traditional information systems with the global reach of the Web.

E-Commerce
E simply means anything done via the internet and commerce means buying and selling products, services and information. ECommerce refers to the process of buying and selling or exchanging of products, services, or information via computer networks including internet. Online buying, selling and paying for product and services is known as e-commerce. E-commerce is associated with buying and selling of information, products and services via computer networks to-day and in the future via any one of the myriad of networks that make up the I-way. E-commerce concerns the processes for buying and selling goods and services electronically. Electronic commerce is the paperless exchange of business information using electronic data interchange (EDI), e-mail, electronic bulletin boards, fax transmissions and electronic fund transfer. It refers to Internet shopping, online stock and bond transactions,

the downloading and selling of soft merchandise such as software, documents, graphics, music etc (Business town.com). E-commerce is the online process of developing, marketing, selling, delivering, servicing, and paying for products & services transacted on internetworked, global marketplaces of customers, with the support of a worldwide network of business partners. Key Concepts in E-Commerce Digital goods: Digital goods are goods that can be delivered over a digital network. E.g., Music tracks video, software, newspapers, and books. Costs of delivery over the Internet very low Marketing costs remain the same; pricing highly variable. Industries with digital goods are undergoing revolutionary changes (publishers, record labels, etc.). Digital market: In Digital market, consumers and suppliers can see the prices being charged for goods, and in that sense digital markets are said to be more transparent than traditional market. E-commerce involves digitally enabled commercial transactions between and among organizations and individuals. Digitally enabled transactions include all transactions mediated by digital technology Commercial transactions involve the exchange of value across organizational or individual boundaries in return for products or services.

Electronic Commerce from the different perspective

Communication Perspective: Electronic Commerce is the delivery of the information, products/ services, or payments over the telephone lines, computer network, or any other electronic means. Business Process Perspective: EC is the application of the technology toward the automation of business transactions and workflow. Online Perspective: EC provides the capability of buying and selling products and information on the internet and other online services.

Service Perspective: EC is the tool that addresses the desire of firms, consumers, and management to cut service costs while improving the quality of goods and increasing the speed of service delivery.

The Scope of E-Commerce

Clicks and Bricks Bricks-and-clicks is a business model by which a company integrates both offline (bricks) and online (clicks) presences. It is also known as click-and-mortar or clicks-and-bricks, as well as bricks, clicks and flips, flips referring to catalogs. For example, an electronics store may allow the user to order online, but pick up their order immediately at a local store, which the user finds using locator software. Conversely, a furniture store may have displays at a local store from which a customer can order an item electronically for delivery.

For Consumer Unable to examine products personally Security Credit card fraud Trust For Business Hardware and software Maintenance of Website Intellectual property Taxation Limited market place Training and maintenance

Categories of E-Commerce
On the basis of the nature of the participants, ecommerce are three types. These are Business-to-consumer (B2C) Business-to-business (B2B) Consumer-to-consumer (C2C) Business-to-consumer (B2C) Business-to-customer(B2C): Selling or retailing of products and services directly to individual customers (Wal-Mart.com).It involves commercial interaction between a business entity and an individual consumer, where a business sells to a consumer for example, a customer buying a shirt from a retailer through the Internet. Munshigi.com, bajna.com and E-bangla.com are the most popular B2C E-commerce in Bangladesh. Businesses typically sell products and services to consumers at E-commerce websites that provide attractive Web pages, multimedia catalogs, interactive order processing, secure electronic payment systems, and online customer support Business-to-Business (B2B) Sales of goods and services to other businesses (Grainger.com, Ariba.com).Business-to-business applications of E-commerce involve electronic catalog, exchange, and auction marketplaces that use Internet, intranet, and extranet websites and portals to unite buyers and sellers. It involves online commercial interaction between two business entities for example, a wholesale buyer doing business negotiations with a garments manufacturer over the Internet. B2B application already exists in the

Strategic impact
Electronic commerce can have a strategic impact on business by: Providing an innovative approach for conducting business. Providing a reduction in the cost of transactions. Providing unique, customized products for its customers. Providing customer access 24 hours every day.

Benefits of E-Commerce
For Consumers Reduced Prices Global marketplace 24 hour access Larger Purchase per transaction Reduced time For Business Increased potential market share Easier entry to new market Low cost advertisement Low barriers to entry Improved customer relation Eliminate Middleman Reduced paperwork Advice from experts and peers New business opportunity Improved market analysis

Disadvantages of E-Commerce

export sector of Bangladesh, especially in the Ready Made Garments (RMG) industry. Three main types of B2B e-commerce: Supplier-oriented marketplace supplier company provides e-commerce capabilities for other businesses to order its products. Buyer-oriented marketplace buyer requests quotations or bids from other companies electronically.Intermediary-oriented marketplace acts as an intermediary between buyer and seller.

E-commerce Opportunities for industries

Financial service Stock trading Banking Legal and professional service Tour and travel Healthcare

Essential e-commerce processes required

for the successful operation and management of e-commerce activities. There are nine key components of an e-commerce process architecture that is the foundation of the ecommerce initiatives of many companies. Essential E-Commerce Architecture Access Control and Security: E-commerce processes must establish mutual trust and secure access between the parties in an ecommerce transaction by authenticating users, authorizing access, and enforcing security features. Profiling and Personalizing: Processes that gather data on you and your website behavior and choices, and build electronic profiles of your characteristics and preferences. These profiles are then used to recognize you as an individual user and provide you with a personalized view of the contents of the site, as well as product recommendations and personalized Web advertising. Search Management: Efficient and effective search processes provide a top e-commerce website capability that helps customers find the specific product or service they want to evaluate or buy. Content Management: Software that helps ecommerce companies develop, generate, deliver, update, and archive text data and multimedia information at e-commerce websites. Catalog Management: Software that helps generate and manage catalog content. Workflow Management: Software that helps employees electronically collaborate to accomplish structured work tasks within knowledge-based business processes. Event Notification: Software that notifies customers, suppliers, employees, and other

Consumer-to-consumer (C2C)
Individuals using the Web for private sales or exchange. Consumer selling directly to consumer (eBay.com). It involves commercial interaction between two private individuals for example, auction sites. If a person wants something to sale, then he can get it listed at an auction site, and others can bid for it. Other types of e-commerce Other types of e-commerce are Consumer-to-government (C2G) Business-to-government(B2G) Government-to-government(G2G)

History of e-commerce
Began in 1995 and grew exponentially; still growing at an annual rate of 16% Rapid growth led to market bubble. While many companies failed, many survived with soaring revenues E-commerce today the fastest growing form of retail trade in U.S., Europe, Asia. 7 Unique Features of E-commerce Technology Available everywhere, all the time Offers global reach (across cultural/national boundaries). Operates according to universal standards (lowers market entry for merchants and search costs for consumers). Provides information richness (more powerful selling environment) Is interactive (can simulate face-to-face experience, but on a global scale) Increases information density (amount and quality of information available to all market participants) Permits personalization/customization

stakeholders of their status in a transaction based on events initiated by one of the parties. Collaboration and Trading: Processes that support the vital collaboration arrangements and trading services needed by customers, suppliers, and other stakeholders.

E-Commerce Success Factors

Selection and value: Attractive product selections, competitive prices, customer support after the sale, satisfaction guarantees. Performance and service: Fast, easy navigation, shopping and purchasing, quick shipping and delivery. Look and feel: Multimedia product catalog pages, shopping features, website shopping area. Advertising and Incentives: Email promotions, discount and special offers, advertising at affiliate sites. Personal attention: Personalized product recommendations, Web advertising. Community Relationship: Virtual communities of customers, suppliers, and others via newsgroup, chat room and links to related sites. Security and Reliability: Security of customer information and website transactions, reliable order fulfillment.

E-commerce in Bangladesh actually started in the year of 1999 based in USA with some nonresident Bangladeshis. This people opened some Bangladeshi sites focused on providing local news and some transactional things like sending gift items to Bangladesh. Problems of e-commerce in Bangladesh Enterprise managers lack of initiatives and leadership in taking advantages of ecommerce. Lack of sufficient Infrastructure Lack of General awareness about e-commerce Lack of awareness at government level of ecommerce issues Problems of e-commerce in Bangladesh Poor number of users of web sites Mistrust Bandwidth Small number of Credit card users Limitations of supportive legal system Absence of cyber law

Overcome
Infrastructure development Legal framework Skilled manpower Ensure proper security about customers information (i.e Credit card number) by cyber law. Development of proper educational institution to create efficient IT professionals To increase the use of computers and internet facilities, government should withdraw all taxes from computers and its accessories. Proper banking infrastructure for issuing debit/credit card and online money transaction facility. Government should create an image of ecommerce awareness and leadership, and demonstrate to business community the importance of e-commerce. Relax foreign exchange control on travel and for business and allow issuance of international credit cards. Establish sufficient number of cyber caf through private entrepreneurs. Make business Association and organizations aware of the benefit of e-commerce. BGMEA can play a significant role in this respect. Political commitment to improve governance and institutional strengthening are essential for successful of e-commerce.

Technology and E-commerce

The Internet and Web are just two of a long list of technologies, such as automobiles and radio that have followed a similar historical path. Although e-commerce has grown explosively, eventually its growth will cap as it confronts its own fundamental limitations. The Internet, intranets, and extranets are the network infrastructure or foundation. Customers must be provided with a range of secure information, marketing, transaction processing, and payment services. Trading and business partners rely on the Internet and extranets to exchange information and accomplish secure transactions. Company employees depend on a variety of Internet and intranet resources to communicate and collaborate. IS professionals and end users can use a variety of software tools to develop and manage the content and operations of the websites and other ecommerce resources.

E-commerce in Bangladesh