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How has Amazon used technology to revamp the bookselling industry?

Buying books online not in stores, ebooks

Is Amazon using disruptive or sustaining technology to run its business?

At first disruptive, now mostly sustaining but also disruptive by introducing new products like Kindle. Suggesting products other similar users also bought.

How is Amazon using personalization to keep customers loyal?

What is Amazon's ebusiness model(s)?

To treat the customer like an individual. Primary business model when they started was B2C. Ebooks will replace textbooks because they're cheaper, green, convenient

Do you believe eBooks, such as Kindle, will (or should) replace textbooks? Why?

World Wide Web

Provides access to internet information through documents including text, graphics, audio, and video files that use special formatting language called HTML.

Hypertext Markup Language (HTML)

Links documents, allowing users to move from one to another simply by clicking on a hot spot or link.
A new way of doing things that initially does not meet the needs of existing consumers. Typically enter the low end of the marketplace and eventually evolve to displace high-end competitors and their reigning technologies. Tend to open new markets and destroy old ones. Ex: Sony started as a company that built portable, battery-powered transmitter radios with poor sound quality, but the portability was convenient to customers. With the revenue it gained from those sales, it became an ever-improving and dominating force in its industry.

Disruptive Technology

Sustaining Technology

Produces an improved product customers are eager to buy. Provide us with better, faster, and cheaper products in established markets. Ex: Faster car or large hard drive.

Intranet

Internalized portion of the Internet, protected from outside access, for employees.

Extranet

An intranet that is available to strategic alliances.

Portal

Web site that offers a broad array of resources and services.

Kiosk

Publicly accessible computer system that allows interactive information browsing.

Internet Service Providers (ISP)

Provides individuals and other companies access to the Internet.

Online Service Provider (OSP)

Offers an extensive array of unique Web services.

Application Service Provider (ASP)

Offers access over the Internet to systems and related services that would otherwise have to be located in organizational computers
Applies to businesses buying from and selling to each other over the Internet. o Electronic marketplace: interactive business communities providing a central market where multiple buyers and sellers can engage in e-business activities together
Applies to any businesses that sells its products or services to consumers over the Internet

Business-to-Business

Business-to-Consumer

o Pure Play (Only Online) - A business that operates on the Internet only without a physical store. Examples Amazon.com, Expedia.com. o Brick and Mortar (Only Physical) - A business that operates in a physical store without an Internet presence. o Click and Mortar (Physical&Online) - A business that operates in a physical store and on the Internet. Examples REI and Barnes and Noble. E-shop: a version of a retail store where customers can shop any time without leaving their home E-mall: consists of a number of e-shops; it serves as a gateway through which a visitor can access other e-shops

Consumer-to-Business

Applies to any consumer that sells a product or service to a business over the Internet. o priceline.com, the demand for C2B e-business will increase over the next few years due to customer's desire for greater convenience and lower prices

Consumer-to-Consumer

Applies to sites primarily offering goods and services to assist consumers interacting with each other over the Internet. o Communities of interest, communities of relations, communities of fantasy

eBusiness Advantages

Expanding global reach Opening new markets Reducing costs Improving operations Improving effectiveness

eBusiness Challenges

Identifying limited market segments Managing consumer trust Ensuring consumer protection Adhering to taxation rules
Electronic auction (e-auction): sellers and buyers solicit consecutive bids from each other and prices are determined dynamically. Forward auction: sellers use as a selling channel to many buyers and the highest bid wins (price goes up). Reverse auction: buyers use to purchase a product or service, selecting the seller with the lowest bid. (price goes down).

Online Auctions

eBusiness Measurements

Traffic: cookie, click-through, banner ad, interactivity Clickstream data: tracks exact pattern of a consumer's navigation through a site. More effective than traffic.

Web 1.0

A term to refer to the WWW during its first few years of operation between 1991 and 2003. Ecommerce - Buying and selling of goods and services over the Internet. Ebusiness - Includes ecommerce along with all activities related to internal and external business operations.

Web 2.0

The next generation of Internet use - a more mature, distinctive communications platform characterized by three qualities Collaboration Sharing Free o Technical skills are no longer required to use and publish information on the WWW, eliminating entry barriers for online businesses. o Brings People closer together with Information using Machines.

Web 3.0

Based on "intelligent" Web applications using natural language processing, machine-based learning and reasoning, and intelligence applications. Offers a way for people to describe information such that computers can start to understand the relationships among concepts and topics. Brings Machines closer together with Information. o Semantic Web: A component of Web 3.0 that describes things in a way that computers can understand. Describes relationships between things and properties of things.

Mass Customization

The ability of an organization to tailor its products or services to the customers' specifications
Occurs when a company knows enough about a customer's likes and dislikes that it can fashion offers more likely to appeal to that person.

Personalization

eBusiness

eBusiness is the use of the Internet and other networks and information technologies to support electronic commerce, enterprise communications and collaboration, and web-enabled business processes both within an internetworked enterprise, and with its customers and business partners.

Reasons for Growth of the WWW

1)Microcomputer revolution 2)Advancements in networking 3)Easy browser software 4)Speed, convenience, and low cost of email 5)Web pages easy to create and flexible

Communities of Interest

People interact with each other on specific topics, such as golfing and stamp collecting. People come together to share certain life experiences, such as cancer patients, senior citizens, and car enthusiasts.
People participate in imaginary environments, such as fantasy football teams and playing one-on-one with Michael Jordan.
1)Visitor metrics 2)Exposure metrics 3)Visit metrics 4)Hit metrics

Communities of Relations

Communities of Fantasy

Web Site Metrics

Operational Decisions (Structured)

Employees develop, control, and maintain core business activities required to run day-to-day operations.
Arise in situations where established processes offer potential solutions. Made frequently and are almost repetitive in nature; they affect short-term business strategies. Ex: Reordering inventory and creating employee staffing and weekly production schedules.
Employees are continuously evaluating company operations to hone the firms abilities to identify, adapt to, and leverage change. A company that has competitive advantage needs to constantly adjust and revise its strategy to remain ahead of fast-following competitors. These decisions cover short- and medium- range plans, schedules, and budgets along with policies, procedures, and business objectives for the firm.

Structured Decisions

Managerial Decisions (Semistructured)

Semistructured Decisions

Decisions that occur in situations in which a few established processes help to evaluate potential solutions, but not enough to lead to a definite recommended decision. Ex: decisions about producing new products or changing employee benefits.

Strategic Decisions (Unstructured)

Managers develop overall business strategies, goals, and objectives as part of the company's strategic plan.

Unstructured Decisions

These decisions occur in situations in which no procedures or rules exist to guide decision makers toward the correct choice. These are infrequent, EXTREMELY IMPORTANT, and typically related to long-term business strategies. Ex: the decision to enter a new market or even a new industry over, say, the next three years.

Critical Success Factors

1) Create high quality products 2) Retain competitive advantage 3) Reduce product costs 4) Increase customer satisfaction 5) Hire and retain the best business professionals

Key Performance Indicators

1) Turnover rates of employees 2) Percentage of help desk calls answered 3) Number of product returns 4) Number of new customers 5) Average customer spending

Market Share

Proportion of the market that a firm captures.

Benchmarking

A process of continuously measuring system results, comparing those results to optimal system performance, and identifying steps and procedures to improve system performance. Encompasses all the information contained within a single business process or unit of work, and its primary purpose is to support the performance of daily operational or structured decisions.
The capture of transaction and event information using technology to: 1) process the information according to defined business rules. 2) Store information. 3) Update existing information to reflect the new information.

Transactional Information

Online Transaction Processing (OLTP)

Transaction Processing System (TPS)

The basic business system that serves the operational level (analysts) and assists in making structured decisions. (Payroll or order entry system).

Online analytical processing (OLAP)

The manipulation of information to create business intelligence in support of strategic decision making
A specialized DSS that supports senior level executives and unstructured, longterm, nonroutine decisions requiring judgment, evaluation, and insight. DDS: Model information using OLAP, which provides assistance in evaluating and choosing among different courses of action.

Executive Information Systems (EIS)

Consolidation

Involves the aggregation of information and features simple roll-ups to complex groupings of interrelated information. Enables users to get details, and details of details, of information

Drill-Down

Slice-and-Dice

looks at information from different perspectives. Quick diagnosis, how to solve the issue. Orders fall through the cracks because of lack of communication, and the lack of a understanding process.
When an organization is vertical, each department only focuses on one aspect of the order, and things can get lost in between the 'silos'

HBR: Staple Yourself To An Order

Functional Silo

Business Process

A standardized set of activities that accomplish a specific task, such as processing a customer's order. A group of business activities undertaken by an organization in pursuit of a common goal. Typically include: receiving orders, selling products, delivering services, disturbing products, or invoicing for services received.

Business Process Modeling (Mapping)

The activity of creating a detailed flow chart or process map of a work process showing its inputs, tasks, and activities, in a structured sequence. o As-Is process model o To-Be Process model

Business Process Improvement

Attempts to understand and measure the current process and make performance improvements accordingly.
Attempts to understand and measure the current process, and make performance improvements accordingly. Staying in the current process but making small continuous changes. Works to eliminate unnecessary work and improve productivity, involves identifying, analyzing, and improving the process. Action is taken to ensure the process is controlled. The improvement processes is critical to seizing and maintaining a competitive advantage.

Continuous Business Process Improvement Model

Business Process Reengineering

Fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in cost, quality, speed, and service. Analysis and redesign of workflow within and between enterprises. Taking a different path.

Business Process Management

Integrates all of an organization's business process to make individual processes more efficient. Allows business processes to be executed more efficiently and measures performance and identifies opportunities for improvement. Three drivers: o Modeling for understanding and documentation: Know the game plan from start to finish of how things get done. o Modeling for Redesign: moving from is to should o Modeling for execution and compliance: In the new process, but not experienced with the new process. Training of the new process.

Artificial Intelligence

Stimulates human thinking and behavior, such as the ability to reason and learn. Its ultimate goal is to build a system that can mimic human intelligence.

Sensitivity Analysis

The study of the impact that changes in one (or more) parts of the model have on other parts of the model. How sensitive the model is to changes in the parameters.

Goal-Seeking Analysis

Finds the inputs necessary to achieve a goal such as a desired level of output. Opposite of what-if analysis, set an output goal and then find what inputs you need to accomplish it.

What-if Analysis

Checks the impact of a change in an assumption on the proposed solution. Change and input and see what happens to the output.

Fact

The confirmation or validation of an event or object.

Information Age

When infinite quantities of facts are widely available to anyone who can use a computer.
1)Amazon (Original focus to sell books, NOW SELLS EVERYTHING); 2) Netflix (Focus on renting videos); 3) Zappos (Focus on selling shoes, bags, clothing, acc)
Raw facts that describe the characteristics of an event or object. (Today, successful managers compile, analyze, and comprehend massive amounts of ____ daily, which helps them make more successful business decisions.

Non-Technology Companies

Data

Information

Data converted into meaningful and useful context.

Variable

A data characteristic that stands for a value that changes or varies over time. (Ex. In an order form, Product Price and Quantity would be ________ data). Information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that analyzes the patterns, trends, and relationships for strategic decision making. Includes the skills, experience, and expertise, coupled with information and intelligence that creates a person's intellectual resources.

Business Intelligence (BI)

Knowledge

Knowledge Workers

Individuals valued for their ability to analyze and interpret information. (They use BI along with personal expertise to make decisions based on both information and intuition)

Core Drivers of the Information Age (4)

Data, Information, Business Intelligence, and Knowledge.

Accounting (Monetary Data)

Records, measures, and reports monetary transactions.

Finance (Monetary Data)

Tracks strategical issues including money, banking, credit, investments, and assets.

Human Resources (Employee Data)

Maintains policies, plans, and procedures for the effective management of employees. Supports sales by planning, pricing, and promoting goods or services.

Marketing (Transactional Data)

Operations Management (Production Data)

Manages the process of converting or transforming resources into goods or services.

Sales (Transactional Data)

Performs the function of selling goods or services.

System

A collection of parts that link to achieve a common purpose. (Primary enabler of cross-functional operations).
A way of monitoring the entire system by viewing multiple inputs being processed or transformed to produce outputs while continuously gathering feedback on each part. (End-to-end view of how operations work together to create a product or service).

System Thinking

Feedback

Information that returns to ints original transmitter (input, transform, or output) and modifies the transmitter's actions. (Helps maintain stability).

Management Information Systems (MIS)

A business function, like accounting and human resources, which moves information about people, products, and processes across the company to facilitate decisions making and problem solving. (Incorporate System Thinking to help companies operate cross-functionally; If one part malfunctions, the whole thing goes to SH*T).

Chief Information Officer (CIO)

Responsible for (1) overseeing all uses of MIS and (2) ensuring that MIS strategically aligns with business goals and objectives.

Chief Knowledge Officer (CKO)

Responsible for collecting, maintaining, and distributing company knowledge.

Chief Privacy Officer (CPO)

Responsible for ensuring the ethical and legal use of information within the company.
Responsible for ensuring the security of business systems and developing strategies and safeguards against attacks by hackers and viruses.

Chief Security Officer (CSO)

Chief Technology Officer (CTO)

Responsible for ensuring the speed, accuracy, availability, and reliability of the MIS.

Business Strategy

A leadership plan that achieves a specific set of goals or objectives: 1) Developing new products or services. 2) Entering new markets. 3) Increasing customer loyalty. 4) Attracting new customers. 5) Increasing sales. 6) Decreasing sales.

Competitive Advantage

A feature of a product or service on which customers place a greater value than they do on similar offerings from competitors. (Provides the same product or service either at a lower price or with additional value that can fetch premium prices).

Firs-Mover Advantage

When a company can significantly increase its market share by being the first with a new Competitive Advantage.
The process of gathering information about the competitive environment, including competitors' plans, activities, and products, to improve a company's ability to succeed.
(1) The Five Forces Model (For evaluating industry attractiveness). (2) The Three Generic Strategies (For choosing a business focus). (3) Value Chain Analysis (For executing business strategies).

Competitive Intelligence

Tools to Analyze Competitive Intelligence and Develop Competitive Advantage

Michael Porter Discovered Market Pressures

(1) Knowledgable customers can force down prices by pitting rivals against each other. (2) Influential suppliers can drive down profits by charging higher prices for suppliers. (3)Competition can steal customers. (4) New market entrants can steal potential investment capital. (5) Substitute products can steal capital.

Buyer Power *Porter's Five Forces Model*

The ability of buyers to affect the price they must pay for an item. Reduce by: (1) Switching Costs (Costs that make a customer reluctant to switch to another product or service). (2) Loyalty Programs (Reward customers based on their spending).
The suppliers' ability to influence the prices they charge for supplies (including materials, labor, and services). *If Supplier Power is HIGH, the supplier can influence the industry by: (1) Charging higher prices. (2) Limiting quantity or services. (3) Shifting costs to industry participants. (Buyers lose revenue when supplier power is high) *Decrease Supplier Power by finding alternative sources for a product or service.

Supplier Power *Porter's Five Forces Model*

Threat of Substitute Products or Services *Porter's Five Forces Model*

HIGH when there are many alternatives to a product or service. LOW when there are few alternatives from which to choose. *(Can be reduced by offering additional value through wider product distribution; Ex. Soft drinks- vending machines, gas stations, convenience stores etc.). HIGH when it is easy for new competitors to enter the market. LOW when there are significant entry barriers to joining a market. (See: Entry Barrier)

Threat of New Entrants *Porter's Five Forces Model*

Rivalry Among Existing Competitors *Porter's Five Forces Model*

HIGH when competition is fierce in a market. (Retail grocery industry). LOW when competitors are more complacent.

Entry Barrier

A feature of a product or service that customers have come to expect and entering competitors must offer the same for survival.
When a company develops unique differences in its products or services with the intent to influence demand. (Reduces rivalry in some cases; Ex. Amazon uses customer profiling to determine recommendations for their particular profile).

Product Differentiation

Three Generic Strategies

(1) Broad Cost Leadership. (2) Broad Differentiation. (3) Focused Strategy. *(Broad strategies reach a larger market segment, while Focused strategies target a niche market with either cost leadership or differentiation).

Broad Market and Low Cost *Three Generic Strategies* (Cost Leadership)

Walmart competes by offering a broad range of products at low prices. Its business strategy is to be the LOW-COST provider of goods for the COSTCONSCIOUS consumer. Neiman Marcus competes by offering a broad range of differentiated products at HIGH prices. Its business strategy offers a variety of specialty and upscale products to AFFLUENT customers.
Payless competes by offering a specific product, shoes, at low prices. Its business strategy is to be the LOW-COST provider of shoes. Payless competes with Walmart, which also sells LOWCOST shoes, by offering a far bigger selection of sizes and styles.

Broad Market and High Cost *Three Generic Strategies* (Differentiation)

Narrow Market and Low Cost *Three Generic Strategies* (Focused Strategy)

Narrow Market and High Cost *Three Generic Strategies* (Focused Strategy)

Tiffany & Co. competes by offering a differentiated product, jewelry, at HIGH prices. Its business strategy allows it to be a HIGH-COST provider of premier designer jewelry to AFFLUENT customers.

Business Process

A standardized set of activities that accomplish a specific task, such as processing a customer's order. (Determined after type of industry to enter and generic strategies have been identified).

Value Chain Analysis

Views a firm as a series of Business Processes that each add value to a product or service. (Useful for determining how to create the greatest possible value for customers; End goal is to identify processes in which the firm can add value for the customer and create a competitive advantage for itself, with a cost advantage or product differentiation).

Primary Value Activities (5)

Acquire raw materials and manufacture, deliver, market, sell, and provide after-sale services. (BOTTOM) Acquires new raw materials and resources and distributes to manufacturing as required. Transforms raw materials or inputs into goods and services.

Inbound Logistics (1)*Primary Value Activities (5)*

Operations (2)*Primary Value Activities (5)*

Outbound Logistics (3)*Primary Value Activities (5)*

Distributes goods and services to customers.

Marketing and Sales (4)*Primary Value Activities (5)*

Promotes, prices, and sells products to customers.

Service (5)*Primary Value Activities (5)*

Provides customer support after sales of goods and services.

Support Value Activities (4)

Firm infrastructure, human resource management, technology development, and procurement. (TOP) Includes the company format or departmental structures, environment, and systems. Provides employee training, hiring, and compensation.

Firm Infrastructure (1)*Support Value Activities (4)*

Human Resource Management (2)*Support Value Activities (4)*

Technology Development (3)*Support Value Activities (4)*

Applies MIS to processes to add value.

Procurement (4 Support Value Activities 4)

Purchases inputs such as raw materials, resources, equipment, and supplies.

What might have happened to Apple if its top executives had not supported investment in iPods (or iPhones)? Using Porter's Five Force Model, analyze Apple's buyer power and supplier power.

If the executives did not support the investment, then they would have ended up going under. They had to take a risk to expand.
High supplier power because buyers had few choices and other companies started streamlining into the market. With these fast followers the consumers had more choices so the supplier power decreased.

Which of Porter's Five Forces did Apple address through its introduction of the iPod or iPhone?

High Supplier power because they started bundling items together to make the iPhone (bundling a phone, internet, and iPod).

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