CHAPTER I

KEY TERMINOLOGY AND EVOLUTION OF E-BUSINESS

LECTURER: LE THI MY HANH

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AFTER STUDYING THIS CHAPTER, YOU SHOULD BE ABLE TO:
1. Understanding what the terms “e-business”, “electronic
commerce” and “mobile e-commerce” mean.
2. Define the concept of strategy and recognize the different levels
of strategy development.
3. Describe the life cycle technological revolutions and illustrate it
through different examples.
4. Recognize the four main periods of e-business evolution over
the past decade and explain the peculiar characteristics of each
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period.
1.1. KEY TERMINOLOGY

1. E-business
2. Electronic commerce
3. Mobile e-commerce
4. The concept of strategy
5. The concept of value creation and capturing
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E-BUSINESS, E-COMMERCE AND MOBILE E-COMMERCE

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E-BUSINESS, E-COMMERCE AND MOBILE E-COMMERCE

E-business: the use of electronic means to conduct and organization’s

business internally and/or externally.
E-commerce: deals with the facilitation of transactions and selling of
products and services online, i.e. via the Internet or any other
telecommunications network.
Mobile e-commerce (m-commerce): refers to online activities of e-
commerce underlying technology which are accessed through wireless
hand-held devices such as mobile phones, smart phones, hand-held
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computers and tablets.

 E-BUSINESS, E-COMMERCE AND MOBILE E-COMMERCE

E-business:

oInternal e-business activities include the linking of an organisation’s employees with each
other through an intranet to improve information sharing, facilitate knowledge
dissemination and support management reporting.
oe-Business activities also include supporting after-sales service activities and collaborating
with business partners, e.g. conducting joint research, developing a new product and
formulating a sales promotion.
E-commerce:
oInvolves the electronic trading of physical and digital goods such as online marketing, online
ordering, e-payment and, for digital goods, online distribution (i.e. for after-sales support
activities). 03/25/2021 6

oe-Commerce applications with external orientation are buy-side e-commerce activities with
THE CONCEPT OF STRATEGY
Strategy is:
. . . the direction and scope of an organisation over the long-term, which achieves

advantage for the organisation through its configuration of resources within a changing
environment to the needs of markets and to fulfil stakeholder expectations. (Gerry
Johnson, Kevan Scholes and Richard Whittington2)
. . . the determination of the basic long-term goals and objectives of an enterprise, and the

adoption of courses of action and the allocation of resources necessary for carrying out
these goals. (Alfred Chandler3)
. . .the deliberate search for a plan of action that will develop a business’s competitive
advantage and compound it. (Bruce Henderson4)
… the strong focus on profitability not just growth, an ability to define a unique value

proposition, and a willingness to make tough trade-offs in what not to do. (Michael
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Porter5)
THE CONCEPT OF STRATEGY
Strategy is:
. . . the direction and scope of an organisation over the long-term, which achieves

advantage for the organisation through its configuration of resources within a changing
environment to the needs of markets and to fulfil stakeholder expectations. (Gerry
Johnson, Kevan Scholes and Richard Whittington2)
. . . the determination of the basic long-term goals and objectives of an enterprise, and the

adoption of courses of action and the allocation of resources necessary for carrying out
these goals. (Alfred Chandler3)
. . .the deliberate search for a plan of action that will develop a business’s competitive
advantage and compound it. (Bruce Henderson4)
… the strong focus on profitability not just growth, an ability to define a unique value

proposition, and a willingness to make tough trade-offs in what not to do. (Michael
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Porter5)
THE CONCEPT OF STRATEGY

long-term direction of the firm.


overall plan for deploying the resources that a firm possesses.

willingness to make trade-offs, to choose between different

directions and between different ways of deploying resources.
achieving unique positioning vis-à-vis competitors.

achieve sustainable competitive advantage over rivals

ensure lasting profitability.
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THE CONCEPT OF STRATEGY

 Three different levels of strategy:

(1) corporate-level strategy,
(2) business unit strategy
(3) operational strategy.
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 THE CONCEPT OF STRATEGY

Three different levels of strategy:

(1) corporate-level strategy: is concerned with the overall purpose and scope of the
firm . Corporate strategy addresses issues such as how to allocate resources between
different business units, mergers, acquisitions, partnerships and alliances.
(2) business unit strategy: is concerned primarily with how to compete within
individual markets. A business unit strategy deals with issues such as industry
analysis, market positioning and value creation for customers
(3) operational strategy (functional-level strategy): deals with how to implement
the business unit strategy with regard to resources, processes and people.
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THE CONCEPT OF STRATEGY

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THE CONCEPT OF VALUE CREATION AND CAPTURING

The ability of a firm to create value for its customers is a

prerequisite for achieving sustainable profitability.

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1.2. THE EVOLUTION OF E-BUSINESS

1. The grassroots of e-business

2. The rise of the Internet
3. The crash
4. The synergy phase

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1.2. THE EVOLUTION OF E-BUSINESS

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1.2. THE EVOLUTION OF E-BUSINESS

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1.2. THE EVOLUTION OF E-BUSINESS

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 1.2. THE EVOLUTION OF E-BUSINESS

Irruption: During the irruption stage, innovative products and services based on the new

technology appear and start slowly to penetrate the economy, which is still dominated by the
previous technology.
Frenzy: is characterised by a sense of exploration and exuberance as entrepreneurs, engineers

and investors alike try to find the best opportunities created by the technological big bang
irruption.
Crash: The gilded age is followed by a crash, when the leading players in the economy realise

that. the excessive investments will never be able to fulfil the high expectations
Synergy: time for “real” economy. During the synergy stage, a few large companies start to
dominate the markets and leverage their financial strength to generate economies of scale
and scope.
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Maturity: is characterised by market saturation and mature technologies. During this stage,

companies concentrate on increasing efficiency and reducing costs, for instance through
 THE GRASSROOTS OF E-BUSINESS

ICT (Information and Communication Technologies)

EDI (Electronic Data Interchange)
IOS (Inter-organizational Information Systems)
Public IT platforms

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 THE RISE OF THE INTERNET

Amazon.com
Priceline.com
CRM system (Customer Relationship Management)
E-market
Start-ups

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 THE CRASH

Market size is artificially inflated

Revenues
Costs
Internet businesses: Ducati, eBay, Google, Tesco.com or Nordea
Social networks: Flickr, Youtube, MySpace, Facebook, Twitter,..
Web-base service focuses on fostering communication, sharing or
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collaboration. (Web 2.0)

 SUMMARY

 The definitions of e-business-related terms, including ‘e-business’, ‘electronic commerce’

and ‘mobile e-commerce’, and definitions of strategy and value creation.
 A framework that describes the typical periods of technological revolutions. It also
positions within this framework the evolution of the Internet during the last decade. The
four main periods that characterise this evolution are:
– the grassroots of e-business period, which took place before the widespread
commercial use of the Internet;
–  the rise of the Internet period, which started with the launch of Amazon.com in 1995
and continued until 2000; 03/25/2021 22

–  the crash (or burst of the dotcom bubble) which took place in March and april 2000
 REVIEW QUESTIONS

 1  define the terms ‘e-business’, ‘electronic commerce’ and ‘mobile electronic

commerce’, and describe how they differ from one another.
 2  provide a definition of strategy as it is used in this text.
 3  What are the three distinctive levels of strategy that can be recognised?
 4  describe the different periods of the life cycle model, as proposed by Carlota
perez.
 5  What are the four time periods of the Internet’s evolution? What are the peculiar
characteristics of each period? 03/25/2021 23

 6  What are the main lessons that the Ceos of pure-player companies (such as