Course: INTERNET BUSINESS MODELS, MKT 6222, Spring 2004
Unique # 12623 555
Meets 1/15/04 - 3/4/04 including final exam
Classes: Th. 6:00-10:00 Room : SOM 2.722
Instructor: Ernan Haruvy Homepage: www.utdallas.edu/~eharuvy
Office: SOM 3.434 Telephone: 972-883-4865
Office Hours: Thursday 5-6 pm or by appt Email:
Objective: The explosion of the Internet in recent years has radically altered the face of business. The objective of this course is to introduce students to key concepts that are pervasive in today’s e-business practices as well as to the perils and opportunities in e-commerce. In particular, we focus on e-business strategy, the construction and implications of different e-business models, interaction with customers—including web interface, customer relationship management, and consumer behavior online—in an online environment, e-marketplaces and business-to-business commerce, data analysis, electronic auctions, market communications, online communities, and branding. We will also touch on various other e-commerce topics, depending on class interest, individual student experiences, and current events.
MATERIALS
1. Textbook: Principles of Internet Marketing – Ward Hanson, South-Western College Publishing
2. Harvard Business School Cases for Professor Haruvy -- MKT 6222
CLASS FORMAT
Classes will consist of a lecture and case analysis, or presentations by students. The reading list is required reading prior to each lecture. Participation is a MUST and will count heavily in your grade.
GRADES
Peer grading is critical in this course. The weight given to each of the activities is given below.
Class Participation: 9%
Assignment 1: Auction registration & bidding 0.25%
Assignment 2: Turn in profiles 0.25%
Assignment 3: Clickstream Data 0.5%
Your written group project
(weighted by your peers’ grade on written project): 30%
Presentation grade:
(weighted by your peers’ grade on presentation): 30%
Final Exam: 30%
SCHEDULE
Cases are to be found in your case packet. Articles are downloadable on the class web site.
Date / Topics / Cases and articles (articles should be downloaded from the class web page; cases are in the case packet) / Chapters / Assignment dueJan 15 / History, Strategy / Article: Why Business Models Matter
Case: Strategy and the Internet, Article: Tech where the action is, Article: How to Make Money on the Net / 1
Jan 22 / Models / Case: Streamline, Case: Charles Schwab, Case: Dell, Article: Online Grocers / 5 / 1, 2
Jan 29 / CRM, personalization, interface
Cons. Behavior, Clickstream / Case: Broadvision / 4, 7 / 3
Feb 5 / B2B, Auctions / Article: EDI, Article: Online Exchanges, Case: “Leveraging Internet Technologies in B2B Relationships”, Case: Amazon, Case: eBay, Article: eBay / ------
Feb 12 / Branding, Leveraging Offline / Case: Monster / 9
Feb 19 / Open Source, Online communities / 2 open source articles, Case: Red Hat, Article: Virtual worlds / 10
Feb 26 / EXAM, New Product Development, Presentations / 8 / Group Project
Mar 4 / Presentations / ------
GROUP PROJECT – WRITTEN PORTION
Each group will prepare a business model and industry analysis in a clearly specified industry or a particular e-marketplace (not from an existing case study) and turn it in.The type of business is flexible, but you need to get approval from me before you begin.
I prefer that you choose from one of the three topics below. The proposed business should not have a major offline component. It should not involve actual production or possession of inventory.
Possible topics for a project:
a. A portal is a jumping off point to the Internet. It is a site on the web that
offers a wide variety of resources such as news articles, e-mail, web site hosting,
search engines, mapping services,and online shopping. Examples include Netcenter,
Microsoft Network and Yahoo!.Some search engines (Excite, Lycos, etc.) could also
be considered Portals. Your group could develop a portal that targets leisure travel consumers. The portal will attempt to be a one-stop site for planning, executing, and sharing ideas about leisure travel.
b. Your group could develop an auction site. If so, the group should worry about the interface and data collection, auction format, the auctions rules, monitoring and enforcement of transactions and rules, quality measures for buyers and sellers, customer relationship management, and other auction characteristics discussed in class.
c. Your group could develop an Internet Mall. An Internet Mall, also known as cybermall, is an electronic site shared by a number of commercial interests, and at which users can browse, shop, and place orders for the products listed at that site. This is possibly the most challenging endeavor, as one would have to provide consumers with a demonstrated advantage to other means of e-shopping, worry about rules for extracting fees from the stores at the mall, and customer relationship management.
In addition to the above rough guidelines:
a. Conduct brainstorming sessions within the group to develop creative ideas for positioning.
b. Do secondary research on ideas that are currently being implemented at different websites to stimulate demand.
c. Develop a plan to implement the recommended strategies
d. Come up with a business model for your business.
e. Discuss at least one use for B2B in your business.
f. Using HTML, prepare the basic user interface, including links and all pages to be linked. You need not use ASP, CGI or servelets to process any data, but you should have a plan for what to do with data and how to customize web pages depending on consumer characteristics, past purchasing history, past visit history, web surfing pattern, web addresses visited just before yours, the page from which the linked to yours, etc. How do you plan to obtain the info you are using to customize?
g. What data will you collect about consumers and how will you analyze it, share it?
h. Implement any other ideas we discussed in class
i. Present project in class
Specific guidelines
I recommend that you begin as soon as possible. The project needs to be double spaced. It can be no less than 20 pages of text and no more than 30 pages of text (not including tables, figures and references). It should have no less than 6 pages of exhibits and no more than 15.
The written project will have two parts. The first part is the industry analysis. The second part is the specific proposal. The two parts should be roughly equal in length and depth.
Part 1: Industry Analysis
The industry analysis must include an introduction with a definition of the scope of the industry, a summary of the industry characteristics and interesting aspects, and a summary of what you intend to accomplish in the analysis. In the body of the project you will review a minimum of three major competitors in that industry, their histories, their business models, and the strengths and challenges each is facing. Make sure you show the interface for each competitor and discuss it as it relates to the 7 C’s of web interface. Show some financial information for each company. Say something about it. It would be helpful at that point to use as much as possible of the materials from class and from other classes to analyze the companies and industry: The business model, SWOT analysis, Porter’s strategic forces, quantitative analysis, 7 C’s, analysis of branding activities, communities, and everything you can remember from the class. Analysis of the overall industry which relies on the individual analyses should follow. Any other data about the industry should be analyzed. A conclusion section should follow which states the implications, how the competitors are similar or different, what trends are expected, what kind of challenges and opportunities the players as well as the industry as a whole are facing, the main aspects of each business model should be repeated and the insights the group has derived should be repeated and emphasized. What is the added value your group has produced? Do not forget the conclusions section. It is the most important section.
Do not blah, blah. Every claim should be backed up from some source (company web page, case reports, SEC or 10K filings, news articles, et.). Each reference should follow the claim and the full reference should be provided in a footnote or the endnotes.
Be very careful in your choice of industry. Too general a topic such as “Internet companies” or “Internet retailers” will lose a lot of points for failure to define a clear scope and for failing to identify all the major competitors. Also, industries such as “Internet travel sites,” “Online banking,” etc. have been done so many times in the past that the benchmark is set very high. Be original. Whatever topic you choose be sure you can collect data on it, particularly on online operations. Some original topics (e.g., online pizza delivery) in the past have ended up with little information on online operations.
Part 2: The Business Proposal
Keep in mind that this is not an “imaginary” business proposal. That is, do not assume you have a million dollars and exclusive alliances. If you plan to have exclusive alliances, sponsors, or financing, explain how you plan to obtain them and why your collaborators would be enticed.
The business proposal must begin with an introduction explaining the intent of the business, the identified customer need the group intends to satisfy, the target segments, the revenue sources, and the resources and competitive advantage that will allow the group to succeed. Also in the introduction should be a summary of the major competitor’s strengths and competitive threats (summarize from part 1). Then explain how you can profitably compete in this industry.
Following the introduction should be the components of the business model itself. Follow the guidelines from lecture 2. That is, Value Proposition, Marketspace Offering, Resource System, and Financial Model. It is highly recommended that you produce egg diagrams and other diagrams as in lecture 2.
In addition to the basic structure of the business model, other sections should be dedicated to providing more detail on competitors and competitive strategies, the target segments, loyalty and stickiness, personalization, communities, branding, B2B activities, and Interface. You do not need to have a separate section on each of these items. For example, one section on the interface could probably encompass most of these topics. However, make sure they are all covered somewhere.
Grading:
Completeness w.r.t. to the above requirements: 10%
Use of material covered in class (and cases): 10%
Depth of Analysis 10%
Originality of business and industry 10%
The competitiveness & viability of the business 10%
Value added on what was learned in class 10%
Organization and flow (Section must seamlessly follow) 10%
Writing style 10%
Introduction 10%
Conclusion 10%
GROUP PROJECT PRESENTATION
Each group will present its business model. DO NOT PRESENT YOUR INDUSTRY ANALYSIS, although you may have one slide summarizing competitor strengths and competitive threats. The class will then rate each group on the following dimensions:
1. Competitors: Did the group correctly identify the critical competitors? Do they have a real competitive advantage over these competitors?
2. Target Segment: Were the target segments clearly identified? Are these segments reachable given the proposed resources?
3. Online offering: Was the online offering complete? That is, do you feel that most or all steps in the consumer decision process could be mapped to some part of the offering?
4. Loyalty, Stickiness, Communities, Branding: A strong community is one way to succeed; a strong brand name is another; beneficial customization is a third. Has the group utilized these three approaches to their fullest potential? Will consumers be loyal?
5. B2B: Did the group take full advantage of B2B opportunities?
6. Personalization: Did you feel that the proposal utilized customization and personalization? Was appropriate data collected on customers/visitors/users and was it utilized effectively?
7. Interface: Was the user interface attractive? Did the group address all 7 C’s?
8. Defensive capability: If the idea is a hit and starts making money, tens (possibly hundreds) of other ambitious entrepreneurs will jump in and brutally compete along the same lines (by copying the business model and design and forming appropriate alliances). With a head start, can the group maintain a strong competitive advantage that is hard to imitate and defend its position against competitors?
9. Revenue Model: Can the group generate revenues and profits from the proposed models? Have they exhausted all possible revenue sources?
10. Presentation: Was the presentation exciting, interesting, and informative?
Class participation grade:
1. Preparation for the class: whether the student has read the case, understands the issues and concepts involved, etc.
2. Participation: whether the student participates in the discussion and contributes to the analysis, and
3. Attendance.
Exam: The exam is closed book, multiple choice and short answer questions. Emphasis will be on testing of basic concepts and application of these concepts to actual situations.