Introduction to business

Worksheet #1

1.What is Web 2.0? Give examples of Web 2.0 sites and explain why you included them in your list. Web 2.0 is a set of applications and technologies that allows users to create, edit, and distribute content; share preferences, bookmarks, and online personas; participate in virtual lives; and build online communities. In other words, Web 2.0 is the set of new, advanced applications that have evolved along with the Web’s ability to support larger audiences and more involved content. Students may list Facebook, Pinterest, Twitter, YouTube, Instagram, Wikipedia, StumbleUpon, Tumblr, and WordPress, among others, as example sites.

2.What are the major limitations on the growth of e-commerce? Which is potentially the toughest to overcome?  One major limitation to the growth of e-commerce is the price of personal computers. Another limitation is the need for many people to learn complicated operating systems, at least in comparison to other technologies such as the television or the telephone. People must also learn a set of fairly sophisticated skills (when compared to radio or television) to make effective use of the Internet and e-commerce capabilities. Another limitation is the unlikelihood that the digital shopping experience will ever replace the social and cultural experience that many seek from the traditional shopping environment. Finally, persistent global income inequality will exclude most of the world’s population. New interfaces supported by new hardware technology, especially in the form of mobile computing platforms (smartphones), has drastically reduced limitations on future growth of e-commerce. As Internet access technologies become cheaper to purchase and easier to use, e-commerce should experience significant long-term growth.

3.What factors will help define the future of e-commerce over the next five years?

               The factors that will help define the future of e-commerce over the next five years    include:

•             The technology of e-commerce—the Internet, the Web, and the number of mobile devices—will continue to proliferate through all commercial activity; overall revenues will continue to rise rapidly; and the numbers of both visitors and products and services sold will continue to grow.

•             Prices will rise to cover the real costs of doing business on the Web and to pay investors a reasonable rate of return on their capital.

•             E-commerce margins and profits will rise to the level of traditional retailers. (The difference between revenues from sales and cost of goods sold will be equal to that of traditional firms.)

•             The top e-commerce sites will increasingly obtain very well known brands from strong, older firms.

•             The most successful e-commerce firms will use both traditional marketing channels such as physical stores, and printed catalogs, as well as e-commerce Web sites. Five years from now we may have a definitive answer to these questions as Walmart and Amazon compete against one another for dominance in online retail. Clearly, Walmart is the leader in the offline traditional retailer marketplace.

Worksheet #7

The advent of e-commerce means that marketers cannot rely on the online presence of existing intermediaries  Einstead they must create their own online intermediaries E Discuss

Summary of arguments for are as follows:

• Intermediaries are important online because of service and product comparison online  Emissed opportunity to communicate.

• Cost of paying referrals to third party.

• Company can use intermediary to explore new concepts and markets while minimizing damage to core brand.

Summary of arguments against are as follows:

• Cost of setting up independent intermediaries.

• Risk that intermediaries will not appear as independent and may not be used.

• Risk of failure in already crowded marketplace.

• Can form partnerships instead at lower risk.


Worksheet #2

1.            Name the six main pieces of the e-commerce site puzzle.

The six main pieces of the e-commerce site puzzle are the organizational capabilities and human resources you will need to build and manage the site, the hardware, the software, the telecommunications infrastructure you will need to meet the demands of your customers, and the site design you will need to implement your business objectives.

2.            Compare the costs for system development and system maintenance. Which is more expensive, and why?

The costs for system maintenance for an e-commerce Web site can run anywhere from 50 to 100% per year of the original systems development costs. For small sites the annual maintenance cost can parallel the development costs, with larger sites achieving some economies of scale. Maintenance is more expensive because e-commerce sites are always in a process of change, improvement, and correction.

E-commerce sites are in fact, never finished. They are always in the process of being built and rebuilt.

3.            What are the eight most important factors impacting Web site design, and how do they affect a site’s operation.

                   The eight most important factors impacting Web site design are:

•             Functionality: The site must have pages that load quickly, perform correctly, and send the user to the requested information about the product offerings.

•             Informational: The site must have links that the customer can find easily in order to obtain information about the company and the products it offers.

•             Ease of use: The site must have a simple foolproof navigation scheme.

•             Redundant navigation: The site must have alternative paths to reach the same content.

•             Ease of purchase: There should be no more than one or two clicks required for the purchasing procedure.

•             Multi-browser functionality: The site should work with the popular browsers.

•             Simple graphics: The site should not use distracting graphics and/or sounds that the user cannot control.

•             Legible text: The site should avoid the use of backgrounds that distort text or make it difficult to read.

Failure to pay attention to these factors will adversely affect the operation of a site because users will find the site frustrating to navigate and view, they will have difficulty obtaining information about the products, and they will determine that making a purchase will be far too complicated

4.            What are the three main factors to consider when choosing the best platform for your Web site?

In choosing the best platform to use for your Web site, the three main factors to consider are the anticipated number of simultaneous users who will likely visit your site, the customer user profile with their expected requests and behavior while at the site, and the nature of the content on your site. The more visitors you have, the greater the demand will be on your system. If the users will be viewing dynamic pages and large multimedia files, far more capacity will be required.

Worksheet #3

Read the attached Case Study ” Turner Sports New Media Marries TV and the Internet Eand answer the question provided.

Describe the unique features of e-commerce technology illustrated in this case?

The unique features of e-commerce technology include:

•             Ubiquity: It is available just about everywhere and at all times.

•             Global reach: The potential market size is roughly equal to the size of the online population of the world.

•             Universal standards: The technical standards of the Internet and therefore of conducting e-commerce, are shared by all of the nations in the world.

•             Richness: Information that is complex and content-rich can be delivered without sacrificing reach

•             Interactivity: E-commerce technologies allow two-way communication between the merchant and the consumer.

•             Information density: The total amount and quality of information available to all market participants is vastly increased and is cheaper to deliver.

•             Personalization/Customization: E-commerce technologies enable merchants to target their marketing messages to a person’s name, interests, and past purchases. They allow a merchant to change the product or service to suit the purchasing behavior and preferences of a consumer.

•             Social technology: User content generation and social network technologies

Worksheet #4

1.            What is cloud computing, and how has it impacted the Internet?

Cloud computing refers to a model of computing in which firms and individuals obtain computing power and software applications over the Internet, rather than purchasing the hardware and software and installing it on their own computers. Cloud computing is the fastest growing from of computing. Cloud computing has impacted the Internet by radically reducing the cost of building and operating Web sites because the necessary hardware infrastructure and software can be licensed as a service from Internet providers at a fraction of the cost of purchasing these services as products.

2.            Name and describe five services currently available through the Web.

Services that are currently available through the Web are:

•             E-mail: This is the most widely used application on the Internet and allows messages and file attachments to be transferred from one Internet user to another.

•             Instant messaging: This comes in the form of a software program that allows typed text to be displayed on a recipient’s computer almost instantaneously, making real-time conversations between two people possible on the Web.

•             Search engines: Search engines are Web sites or services within a site that enable users to locate information by matching keywords that the user provides to a list of documents containing those words or the closest matches.

•             Online forums: Forums are Web applications that enable Internet users to communicate with each other via a message board, bulletin board, or discussion group.

•             Online chat: This software enables several people or even a group of people to carry on a live conversation.

•             Blogs: Blogs are personal Web pages that are created by an individual or corporation to communicate with readers.

•             Really Simple Syndication (RSS): RSS is a program that allows users to have digital content, including text, articles, blogs and podcast audio file, automatically sent to their computers over the Internet.

•             Podcasts: These are audio presentations stored as an audio file and posted to the Web, where it can be downloaded onto a computer or iPod.

3.            Why are mobile apps the next big thing?

Mobile apps are the next big thing because the use of mobile Internet access devices has truly exploded in 2012, with total mobile commerce revenues approaching $25 billion.  Mobile app sales constitute around $6.7 billion of that amount, and more than 70% of U.S. mobile phone owners are expected to use their mobile devices to research and browse products and services, with more than 35% expected to make at least one purchase via mobile phone, more than double the number in 2010.

Worksheet #5

1.            What are the seven key components of an effective business model?

The seven key components of an effective business model are:

•             Revenue model

•             Market opportunity for the firm (the marketspace and how big it is)

•             Competitive environment for the firm (who the competitors are in the marketspace)

•             Competitive advantage the firm brings to the marketspace (the unique qualities that set the firm apart from others in the marketspace)

•             Market strategy the firm will use to promote its products and services

•             Organizational development of the firm that will enable it to carry out its business plan

•             Capabilities of the management team to guide the firm in its endeavors

2.            Describe the five primary revenue models used by e-commerce firms.

The five primary revenue models used by e-commerce firms are:

•             The advertising revenue model

•             The subscription revenue model

•             The transaction fee revenue model

•             The sale revenue model

•             The affiliate revenue model

The advertising model derives its profit by displaying paid advertisements on a Web site. The goal is to convince advertisers that the site has the ability to attract a sizeable viewership, or a viewership that meets a marketing niche sought by the advertiser. Firms that use the subscription model offer users access to some or all of their content or services for a subscription fee. Firms that use the transaction fee model derive profit from enabling or executing transaction. For instance, transaction fees are paid to eBay when a seller is successful in auctioning off a product, and E*Trade receives a transaction fee when it executes a stock transaction for a customer. In the sales revenue model, companies draw profit directly from the sale of goods, information, or services to consumers. In the affiliate model, sites receive referral fees or a percentage of the revenue from any sales that result from steering business to the affiliate.

3.            Would you say that Amazon and eBay are direct or indirect competitors? (You may have to visit the Web sites to answer).

Amazon and eBay are direct competitors because they sell products and services that are very similar, and they sell to the same market segment. They both sell books, music, computers and software, games and toys, electronics, tools, movies and DVDs, and camping equipment. However, eBay has a consumer-to-consumer business model while Amazon has a business–to-consumer business model. Even though eBay sells new, overstocked, remaindered, and used products at discounted prices, the two compete for essentially the same market segment of consumers. eBay may attract the bargain hunter variety of shopper who would not stop at Amazon first, but it is still essentially the same market segment.

Worksheet #6

1.            Research has shown that many consumers use the Internet to investigate purchases before actually buying, which is often done in a physical storefront. What implication does this have for online merchants? What can they do to entice more online buying, rather than pure research?

The fact that many consumers use the Internet to research products before actually making purchases has many implications for online merchants because it suggests that e-commerce is a major conduit and generator of offline commerce. This could mean that e-commerce and traditional commerce should integrate to alleviate the concern. It is very important for online merchants to build the information content on their sites to attract browsers.

Improvements that Web merchants could make to encourage more browsers to become buyers are:

•             Design Web sites to provide easy-to-access and simple to use product information.

•             Create policies for better credit card and personal information security.

•             Make it easier to locate items on the Web site.

•             Create customer service facilities where users can get the answers to their questions and product advice.

•             Increase delivery speeds.

•             Present products more clearly.

•             Create loyalty reward programs.

•             Make the buying process quicker to complete.