Describe the entrepreneurial process Understand the factors affecting e-business success Identify ways to exploit e-business advantages
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process Entrepreneur – Assumes the risks of starting and operating his or her own business – Must be able to lead others – Must believe in his or her business idea – Must have the self-confidence to accomplish business goals
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) E-business entrepreneur examples – Jeff Bezos, Amazon.com – Pierre Omidyar, eBay – Kelby Hagar, GroceryWorks.com and Digital Witness – Jason Zasky, Failure Magazine
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) Entrepreneurial abilities – Leadership traits – High-energy level – Self-confidence – Organizational skills – Ability to act quickly and decisively – Independent, goal-oriented, creative, competitive
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) Entrepreneurial process – Stage 1: Are you an entrepreneur? • Assess your entrepreneurial abilities • Evaluate time and effort involved in starting/running your own business • Consider the effect of the business commitment on your family life
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) Entrepreneurial process (continued) – Stage 2: Buy existing business or start own business?
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) Entrepreneurial process (continued) – Stage 3: For a new business startup you must • Define the business idea • Create a business plan • Secure financing
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) Entrepreneurial process (continued) – Stage 4: Operate and grow your business
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued) Entrepreneurial process (continued) – Stage 5: Harvest your business • Continue to operate “cash cow” • Go public • Sell the business • Liquidate the business
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Second Edition, Chapter 2 The Entrepreneur and the Entrepreneurial Process (continued)
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Second Edition, Chapter 2 Factors Affecting E-Business Success The network effect – Total value of a product, service, or technology grows as more and more people use it • Telephone system example – Single telephone has no value; as more people join the telephone system, the value of each telephone increases • uBid online auction site example – As more people participate, the auction site becomes more valuable to buyers and sellers
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued)
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued)
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued) Innovative marketing ideas – Hotmail and viral marketing example • Hotmail users grew at a rapid rate because of electronic word of mouth coupled with the network effect • Electronic word of mouth or viral marketing spreads from user to user in the same way a human virus spreads from person to person
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued)
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued) Scalability – Ability of a business to function well in the face of rapid growth • Systems and procedures meet customers needs • AllAdvantage e-business failure example – E-business idea: Paying for users to browse the Web and view advertising – Millions of customers signed on; advertisers did not – No scalability with rapid growth in customers
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued) Ease of entry into electronic markets – Low-cost technologies make it easy to create new e-businesses – eBay and online auction example • Easy for consumers to interact at auction site • Web auction software is cheap and easy to install /maintain • E-businesses earn commissions without having to manage, warehouse, and distribute products
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued)
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued) Ease of entry into electronic markets (continued) – Competitive barriers to overcome • Failure to secure first-mover advantage • Lack of name identification • Lack of customer loyalty
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued) Ability to quickly adapt to marketplace changes – Rapid knowledge transfer – Need to make decisions quickly – Exploit new ideas and opportunities – Handle new challenges • Amazon.com is an example of ongoing evolution from a basic e-business idea
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Second Edition, Chapter 2 Factors Affecting E-Business Success (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued) Expand the market – Business and consumers are no longer bound by constraints of time, space, physical location – Opportunity to reach larger market – Ticketmaster example
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued) Acquire greater business visibility – Get business name, products, and services in front of potential customers more quickly – Auto industry example
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued) Use power of the Internet and Web to maximize customer relationships and improve responsiveness – Create customer loyalty – Stay in touch with customer needs – Build one-on-one relationships – Provide information to enrich customers’ online experience • Southwest Airlines example
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued) Create new products and services – Opportunities for new e-business ideas where products or services are accessed over the Web • Business software applications • Server facilities for data file backup • Legal dispute resolution – Cybersettle example • Web hosting services – Rackspace Managed Hosting example
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued) Reduce costs of running a business – Sales and customer support costs – Transaction costs – Order handling costs • Dell Computers, Cisco Systems, and Microsoft Corporation examples
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Exploiting E-Business Advantages (continued)
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Second Edition, Chapter 2 Chapter Summary An entrepreneur assumes the risks of starting and operating his or her own business Entrepreneurial abilities – Leadership – High-energy – Self-confidence – Organization skills – Ability to act quickly
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Second Edition, Chapter 2 Chapter Summary (continued) Five stages of the entrepreneurial process – Decide if you are an entrepreneur – Decide to buy or start new business – Plan the business – Operate the business – Harvest the business
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Second Edition, Chapter 2 Chapter Summary (continued) Factors that can affect e-business success – Network effect – Innovative marketing ideas – Scalability of the e-business idea – Cost of entry into the marketplace – Ability to overcome competitive barriers – Ability to exploit inherent advantages