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Net Enabled E-Business Organization Essay

Nowadays new business model are constantly emerging in electronic commerce and can become a major stake in the e-business game. It is even possible to patent them in some countries. Understanding them and helping to design them are important issues. There are framework or ontology for defining business models. An e-business model ontology outlines what value a company offers to which customer segments. It describes the architecture of the firm and its network of partners for creating, marketing and delivering value relationship capital, in order to generate profitable and sustainable revenue streams.

This ontology is designed based on a extensive literature review on business model and on enterprise ontology. By merging the conceptually rich business model approach with the more rigorous ontological approach and by applying it to e-business, an appropriate foundation for tools that would allow the understanding, sharing and communication, change, measuring and simulation of e-business models. e-Business model Ontology is the conceptualization and formation into elements, relationship, vocabulary and semantics of the essential objects in the e-business model domain.

The ontology is structured into several levels of decomposition with increasing depth and complexity. The first level of decomposition of the ontology contains the four main pillars of a business

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models, which are the products and services a firm offers, the relationship it maintains with its customers, the infrastructure necessary in order to provide this and finally, the financials, which are the expression of business success or failure. An E BUSINESS MODEL ONTOLOGY is composed of the PRODUCT INNOVATION element, the CUATOMER RELATIONSHIP.

The INFRASTRUCTURE MANAGEMENT and its FINANCIALS. These main elements are then further decomposed. Product Innovation The PRODUCT INNOVATION element covers all aspects related to the offering of the firm. This comprises not only products and services but the manner which it differentiate itself from its competitors. In order words, this means not only the firms market scope (Hamel, 2000; Afuah et al; 2001)- which customers, which geographical areas, and what product segments- but also the explanations why customers will rather buy from its firm than from a competitor.

Moreover , the ability to offer value to a customer demands a range of specific capabilities. Net-Enbaled E-business 3 The element PRODUCT INNOVATION is a composed of the VALUE PROPOSITIONS the firm offers to specific TARGET CUSTOMER SEGMENT and the CAPABILITIES a firm has to be able to assure in order to deliver this value. The outcomes of the PRODUCT INNOVATION element are marketed through the CUSTOMER RELATIONSHIP ELEMENT, which at the same time provides a source of feedback for product amelioration. PRODUCT INNOVATION, is based on the INFRASTRUTURE MANAGEMENT which provides a resource for it (see figure 2)

VALUE PROPSITION. This element refers to the value the firm offers to a specific target customer segment . ICT has created many new opportunities for value creation on the hand and more efficient value creation on the other hand (Kambli et;al 1997) TARGET CUSTOMER A firm generally creates for a specific customer segment. The definition of the market scope (Hamel, 2000; Afuah et;al 2001) captures the essence of where the firm does and does not compete- which customers, which geographical areas, and what product segments. CAPABILITIES.

To deliver the value proposition to different customers, a firm must ensure that it possess the range of capabilities that underpin the proposed value. Several authorss describe how value and competencies or capabilities are interconnected (bagchi et;al 2000; Wallin, 2000). Capabilities can be understood as repeatable patterns of actions in the use of assets to create; produce, and/or offer products and services to a market (Wallin 2000) Net-Enbaled E-business 4 A VALUE PROPOSITION is enabled through a range of CAPABILITIES ans is a value for a specific TARGET CUSTOMER segment, which has needs to be fulfilled.

Customer Relationship Through the use of ICT firms can redefine and ameliorate the notion of CUSTOMER RELATIONSHIP. ICT supports and in some cases substitutes direst physical contact with the customer. The CUSTOMER RELATIONSHIP element describes the way a firm goes to market and gets in touch with its customers. Additionally, it contains the strategies of the company to collect and use customer information, in order to improve relationships and adapt the firms offering to customer needs. Finally, the company must define and outline its plans to gain the customers trust and loyalty.

The element CUSTOMERS RELATIONSHIP is composed of the FEEL & SERVE element, which defines the customer “touch points” (e. g. distribution channels), the INFORMATION STRATEGY for the collection and application of customer information and TRUST & LOYALTY element, which is essential in an increasingly “virtual” business world. The CUSTOMER RELATIONSHIP MANAGEMENT and is and income for the FINANCIALS element (see figure 3). INFORMATION STRATEGY. The objective of the information strategy is related information gathering in order to excel in customer relationship (e.

g through personalization and profiling). The information strategy aims at discovering new and profitable business opportunities and to ameliorate customer satisfaction. Data warehousing, data mining and Net-Enbaled E-business 5 business intelligence are important technologies that allow managers to gain insight on their customer buying behaviour. These insights can be used to create what Hamel (Hamel, 2000) calls the positive feedback effect. FEEL & SERVE (Channels). This element refers to the way a firm “goes to market” and how it actually “reaches” its customers (Hamel, 2000).

This means a company must define its channel strategy: either indirect channels, operated by the firm or provide by a third party (e. g. agent, intermediately). ICT, and particularly the internet, has a great potential to complement rather than to cannibalize a business’s channels (Porter, 2001). Direct selling over the web could improve margins, whereas selling through new internet mediation service (cybermediaries) (Sarkar et;al.. 1995) could mean new opportunities. Of course the expansion of the range of channels also increases the potential of conflicts between channels (Anderson et;al.. 1998) and demands strong management.

TRUST & LOYALTY. It is essential to establish trust between business partners when the business environment becomes increasingly virtual and the implicated parties do not necessarily know each other anymore before conducting business. There exists mechanism to build trust in e-business environments, such as virtual communities (Hagel et;al 1997), performance history, mediation service or insurance , third party verification and authorization, and clear privacy policies (Friedman, 2000; Dimitrakos, 2000) customer loyalty can be understood as the outcome of the customer’s trust and satisfaction.

The firm’s INFORMATION STRATEGY refines the relationship it establishes with its customers through the FEEL & SERVE (Channels) element and is “fed” by the latter. The Net-Enbaled E-business 6 TRUST & LOYALTY element improves the FEEL & SERVE through its mechanism. Vice-vers a good FEEL & SERVE contributes to TRUST & LOYALTY. Infrastructure Management ICT and particularly the Internet have had a fundamental impact on the way companies organize their activities inside and at the boundaries of the firm.

Not only that the company boundaries have become more fuzz, but increasingly the decomposition and re-composition of the industry value chain has redistributed the activities among existing and new industry actors. INFRASTRUCTURE MANAGEMENT describes the value system configuration (Gordijin et al; 2000) that is necessary in order to deliver the firms offering and to establish and maintain a customer relationship. It is composed of the ACTIVITY CONFIGURATION and the in-house RESOSOURCES AND ASSET and the firm’s PARTNER NETWORK to fulfill these activities.

The INFRASTRUCTURE MAMAGEMENT element is a resources for PRODUCT INNOVATION and CUSTOMER RELATIONSHIP and a cost for the FINANCIALS element (see figure 2) ACTIVITY CONFIGURATION. The main purpose is the creation of value that customer are willingly to pay for. This value is the outcome of a configuration of inside and outside activities and processes. To define the value creation process in a business model we use the value chain framework (partner et;al.. 1985) and its extension, as defined by (Stabell et; al 1998 ), who add the concept of the value shop and the value network.

Net-Enbaled E-business 7 PARTNER NETWORK. The partner network outlines, which elements of the activity configuration are distributed among the partners of the firm. Shrinkling transaction costs make it easier for firms to vertically disintegrate and to recognize in partner networks. RESOURCES. In order to create value, a firm needs resources (wernefelt, 1984). Grant (Grant, 1995) distinguishes tangible, intangible, and human assets, tangible resouirces invlude plants, equipment and cash reserves, intangible resources include partners, copyrights, reputation, brands and trade secret .

human resources are the people a firm needs in order to create value with tangible and intangible resources. The tasks in the ACTIVITY CONFIGURATION are fulfilled by in-house RESOURCES or a PARTNER NETWORK. Financials THE FINANCIALS element is the culmination of an e-business model. The best products and services and the fines customer relationship are only valuable to a firm if it guarantee long term financial success. The FINANCIALS element is composed of the company’s REVENUE MODEL and its COST STRUCTURE, which finally define the PROFIT/LOSS of a firm.

This element is a resources for INFRASTRUCTURE MANAGEMENT and is funded through the sales in the CUSTOMER RELATIONSHIP (see figure 2) REVENUE MODEL. This element measures the ability of a firm to translate the value it offers its customers into money and therefore generate incoming revenue streams. A firm’s revenue model can be composed of different revenue streams that can all have different Net-Enbaled E-business 8 pricing models. The new pricing mechanism enabled by ICT should be used in order to maximize revenues.

Particularly the internet has had an important impact on pricing and has created a whole new range of pricing mechanisms (Klien et; al 2000) COST STRUCTURE. This element measures all the costs the firm incurs inn order to create, market and deliver value to its customers. It sets a price tag on all the resources, assets, activities and partner network relationships and exchanges that cost the company money. PROFIT MODEL. This elements is simply the outcome of the different between the REVENUE MODEL and the COST STRUCTURE. Therefore, it can be seen as the culminating point ans as an expression of the entire e-business model ontology.

Whereas PRODUCT INNOVATION and CUSTOMER RELATIONSHIP shall maximize revenue, an effective INFRASTRUCTURE MANAGEMENT shall minimize costs and therefore optimize the profit model. THE REVENUE MODEL increases the company’s PROFIT (or diminishes its LOSS) whereas the COST STRUCTURE decrease PROFIT (or increase LOSS) Orbitz Travel port’s largest full service online travel brand, is one of the leading domestic online travel agencies, orbitz was founded by five major domestic airlines in 2000 and began full service operation in 2001.

orbitz offers travelers a wide variety of travel options and has historically introduced many innovations in online booking technology, including the Matrix display and a proactive customer care platform orbitxTLC. Orbitx allows travlers to search for and book broad array of travel products and service including airlines tickets, hotel, accommodations rental cars, vacation packages and cruises. Net-Enbaled E-business 9 Since its launch to the general public in June 2001, Orbitx. com has become one of the three largest online travel agencies. In 2003, gross travel bookings exceeded. $3. 4 billion, a 34 percent increase from 2002 levels.

Currently, nearly 25 million users are registered to book their travel on Orbitz. Com. Products, service and Technology Orbitz. com’s inventory includes more than 400 airlines, more than 65,000 lodging properties and 13 rental car rental brands, as well as a wide selection of offerings by leading vacation package provides and cruise lines. Air search results are presented in an easy-to-use matrix that displays a vast array of travel options to consumers without favoritism towards any supplier, enabling consumers to easily identify and select the price and supplier that best meets their individual needs.

Some of the features that have contributed to Orbitz’ growth include: orbitzTLC: OrbitzTLC builds on Orbitz heritage of technology innovation helping travelers find use and benefit from the value-added services they get along with great prices when book on Orbitz and Go. With offering that include Orbitxtlc system, Orbitz is anticipating travelers needs and wishes before they ask. OrbitzTLC Alerts update customers on flight departure and arrival delays, gate changes and cancelled flights. The alerts notify Orbitz customers and can also contact a preset list of up to six friends.

Family and business colleagues via phone calls, text messages to wireless devices and emails. Dynamic packaging: Orbitz’ dynamic packaging technology enables users to compare multiple combinations of travel products at a glance, facilitating the creation of customized packages of air, hotel and other products in one transaction at one bundled price. Flex search: Flexsearch allows consumers to search flight and fare combinations in a single click that would require dozens of searches on competitive sites. Flex search is aimed at the Net-Enbaled E-business 10

millions of consumers who have flexibility in their travel dates and want to save money by flying when fares are lowest. Deal Detector: Deal Detector is a personalized search tools which regularly checks all flight and fare availability until it finds a match with a traveler’s previously specified criteria then sends an email alert to the travelers. Activities Tab. Orbitz destination services gives travelers the ability to purchase airport transportation, tickets to sporting events and concerts, theme park passes, museum or sightseeing tour tickets at the same as their flights, hotels or vacation packages.

Orbitz Merchant hotels programme: Under the Orbitz merchant negotiation discounted rates with hotels for room inventory. Typically, rooms sold under the programme generates significantly higher pre-transaction revenue for orbitz than hotel rooms sold using other methods, while travelers benefit by obtaining lower room rates than thy might otherwise obtain using other distribution channels. Orbitz corporate History In early 2000 Orbitz was formed by leading U. S airlines as limited liability company. Five airlines took a significant equity stake in Orbitz during its early history.

American, continental, Delta, Northwest and United, Orbitz officially launched its consumer website on June 4, 2001, becoming the largest e-commerce launch of record (Nielson Net ratings). Orbitz, Inc, was a publicly traded company on the Nasdaq National Market under the ticker symbol ORBZ from December 2003 through November 2004. On November 12, 2004, Orbitz was acquired by Cendant’s Travel Distribution Services division, as part of the Consumer Travel Americas group. Cendant’ has agreed to sell its travel distribution services subsidiary now known as Travel port Inc. to an affiliate of the Blackstone group.

Marketing the prominence of Travel port Inc, as one of the world’s largest and most geographical dispersed companies. References 11 REFERENCES 1. Afuah, A; C. Tucci (2001). Internet Business Models and Strategies, Boston: McGraw Hill. 2. Amit, R; Zott, C. (2001). Value Creation in eBusiness, Strategic Management Journal, vol. 22, pp 493-350. 3. Anderson, E; Day, G. S; Rangan V. K. (1998) Strategic Channel Design, Journal of product Innovation Management, Volume 15,, Issue 5, September 1998, pp. 472-473. 4. Au, Y. A. (2001) Design Science 1: The Role of Design Science in Electronic Commerce Research, Communications AIS,, Volume 7.

5. Bagchi. S; Tulskie, B. (2000) e-business Models Intergrating Learning from Strategy Development Experience and Empirical Research, 20th Annual International Conference of the Strategic Management Society, Vancouver, October 15-18. 6. Ben Lagha, S; Osterwalder, A; Pigneur. Y (2001) Modeling e-business with Ebml,5e Conference International de Management des Reseaux d’Enterprises, Mahdia, October 25-26. 7. Benjamin, R. I; Wigland, R. T. (1995). Electronic Commerce: Effects on Electronic Markets, Journal of Computer-Mediated Communication 1(3). 8.

Bertolazzi, P, Krusich, C; Missikoff, M. (2001) An Approach to the Definition of a Core Enterprise Ontology: CEO, OES-SEO 2001, International Workshop on Open Enterprise solutions: Systems, Experience, and Organizations, Rome, September 14-15. 9. Brandenburger, A. ; Nalebuff, B. (1996). Co-operation, New York: Doubleday. 10. Dimtrakos, T. (2001) System Models, e-Risk and E-trust, towards the E-Society, IFIP Conference on Ecommerce, 11. E-Business and E-Government, Dordrecht: Kluwer Academic Publishers Group. 12. Dolan, R. J (2000) Going to market, teaching note, Harvard Business school.

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