Digital Business PDF

digital business Prof. Miguel Houghton. digital business Chapter 1 Introduction to digital business Prof. Miguel Houghton. digital business Learning outcomes Define the meaning...

digital business Prof. Miguel Houghton. digital business Chapter 1 Introduction to digital business Prof. Miguel Houghton. digital business Learning outcomes Define the meaning and scope of digital business and e-commerce and their different elements Prof. Miguel Houghton. digital business Learning outcomes Define the meaning and scope of digital business and e-commerce and their different elements Summarise the main reasons for adoption of digital business and barriers that may restrict adoption Prof. Miguel Houghton.  digital business Learning outcomes Define the meaning and scope of digital business and e-commerce and their different elements Summarise the main reasons for adoption of digital business and barriers that may restrict adoption Outline the ongoing business challenges of managing digital business in an organisation, particularly online start-up businesses Prof. Miguel Houghton.  digital business Management issues How do we explain the scope and implications of digital business to staff? Prof. Miguel Houghton. digital business Management issues How do we explain the scope and implications of digital business to staff? What is the full range of benefits of introducing digital business and what are the risks? Prof. Miguel Houghton. digital business Management issues How do we explain the scope and implications of digital business to staff? What is the full range of benefits of introducing digital business and what are the risks? How do we evaluate our current digital business capabilities? Prof. Miguel Houghton. digital business Digital business “When we declared “every business is a digital business” in the Accenture Technology Vision 2013, we didn’t see it as a trend for last year or this year. We saw it as the future. The future of technology. The future of business. The future of our increasingly interconnected and interdependent world”. Pierre Nanterme Accenture - Chairman & CEO Prof. Miguel Houghton. digital business 1.1 Definitions Prof. Miguel Houghton. digital business Digital business DB is how businesses apply digital technology and media to improve the competitiveness of their organisation through optimising internal processes with online and traditional channels to market and supply. Prof. Miguel Houghton. digital business Digital business Prof. Miguel Houghton. digital business Digital business Prof. Miguel Houghton. digital business Digital business Prof. Miguel Houghton.  digital business Digital business How businesses apply digital technology and media to improve the competitiveness of their organisation through optimising internal processes with online and traditional channels to market and supply. Vs. Electronic commerce All electronically mediated information exchanges between an organisation and its external stakeholders. Prof. Miguel Houghton.  digital business Electronic commerce All electronically mediated information exchanges between an organisation and its external stakeholders. Prof. Miguel Houghton.  digital business Prof. Miguel Houghton.  digital business Prof. Miguel Houghton.  digital business Business-to-consumer (B2C) e-commerce Commercial transactions between an organisation and consumers. Prof. Miguel Houghton.  digital business Business-to-business (B2B) e-commerce Commercial transactions between an organisation and other organisations Prof. Miguel Houghton.  digital business Consumer-to-consumer (C2C) e-commerce Allow Consumers to trade, buy, and sell items Prof. Miguel Houghton. digital business Consumer-to-business (C2B) e-commerce Consumers approach the business with an offer. Prof. Miguel Houghton.  digital business Government-to-consumers (G2C) e-commerce The application of e-commerce technologies to government and public services for citizens and businesses. Prof. Miguel Houghton.  digital business Electronic commerce options… Summary and examples of transaction alternatives between Figure 1.11 businesses, consumers and governmental organisations Prof. Miguel Houghton.  digital business Electronic commerce means of connection Prof. Miguel Houghton.  digital business Electronic commerce All electronically mediated information exchanges between an organisation Buy-side and its external stakeholders. Sell-side e-commerce e-commerce E-commerce E-commerce transactions transactions between an between an organisation organisation and its and its suppliers and customers. other partners. Prof. Miguel Houghton.  digital business Electronic commerce 1) Transactional e-commerce sites: These enable purchase of products online. Sell-side e-commerce E-commerce transactions between an organisation and its customers. Prof. Miguel Houghton.  digital business Electronic commerce 2) Services-orientated relationship-building sites: These provide information to stimulate purchase and build relationships, particularly where products are not suitable for sale online. Sell-side e-commerce E-commerce transactions between an organisation and its customers. https://www.kpmg.com Prof. Miguel Houghton.  digital business Electronic commerce 3) Brand-building sites. These sites provide an experience to support the brand. Products are not typically available for online purchase. Sell-side e-commerce E-commerce transactions between an organisation and its customers. https://us.coca-cola.com Prof. Miguel Houghton.  digital business Electronic commerce 4) Publisher or media sites: These provide information, news or entertainment about a range of topics, both on the site and through links to other sites. Sell-side e-commerce E-commerce transactions between an organisation and its customers. https://www.tmz.com Prof. Miguel Houghton.  digital business Electronic commerce 5) Social network sites (SNS): Social networks could be considered to be in the previous category, since they are often supported by advertising, but their influence on company and customer communications suggests they form a separate category. Sell-side e-commerce E-commerce transactions between an organisation and its customers. Prof. Miguel Houghton.  digital business Disruptive digital technologies Technologies which offer opportunities for business for new products and services for customers and can transform internal business processes. Prof. Miguel Houghton.  digital business Disruptive digital technologies Technologies which offer opportunities for business for new products and services for customers and can transform internal business processes. ‘a technology that changes the bases of competition by changing the performance metrics along which firms compete. Customer needs drive customers to seek certain benefits in the products they use and form the basis for customer choices between competing products’ Danneels (2004). Prof. Miguel Houghton.  digital business Digital business transformation Prof. Miguel Houghton.  digital business Digital business transformation Prof. Miguel Houghton.  digital business Digital business transformation Prof. Miguel Houghton. digital business 1.2 Internet, www and its impact in business Prof. Miguel Houghton.  digital business The Internet ‘The Internet’ refers to the physical network that links computers across the globe. It consists of the infrastructure of network servers and wired and wireless communication links between them that are used to hold and transport data between the client devices and web servers. Prof. Miguel Houghton.  digital business The Internet Prof. Miguel Houghton.  digital business The Internet of Things What is the Internet of Things? It’s the networked interconnection of everyday machines to one another, as well as to humans. Porter.. https://www.youtube.com/watch?v=Up6AiNFJI3g Prof. Miguel Houghton.  digital business World Wide Web (WWW) The most common technique for publishing information on the Internet. It is accessed through desktop or mobile web browsers which display interactive web pages of embedded graphics and HTML/ XML encoded text Prof. Miguel Houghton.  digital business Figure 1.1 Google circa 1998 Source: Wayback machine archive: http://web.archive.org/web/19981111183552/google.stanford.edu. Google and the Google logo are registered trademarks of Google Inc., used with permission. Prof. Miguel Houghton.  digital business Digital business major innovation 1990 1995 2000 2005 2010 2015 Prof. Miguel Houghton.  digital business Digital business transformation Prof. Miguel Houghton. digital business 1.3 Supply chain and its adaptation to DDBB Prof. Miguel Houghton.  digital business Digital business How businesses apply digital technology and media to improve the competitiveness of their organisation through optimising internal processes with online and traditional channels to market and supply. Prof. Miguel Houghton.  digital business Digital business How businesses apply digital technology and media to improve the competitiveness of their organisation through optimising internal processes with online and traditional channels to market and supply. Prof. Miguel Houghton.  digital business Value chain A model for analysis of how supply chain activities can add value to products and services delivered to the customer. Prof. Miguel Houghton.  digital business Value networks The links between an organisation and its strategic and nonstrategic partners that form its external value chain. Prof. Miguel Houghton.  digital business Supply chain management (SCM) The coordination of all supply activities of an organisation from its suppliers and partners to its customers. https://www.youtube.com/watch?v=Mi1QBxVjZAw Prof. Miguel Houghton.  digital business Stage models Used to review how advanced a company is in its use of information and communications technology (ICT) to support different processes. Prof. Miguel Houghton. digital business 1.4 New players in the digital world Prof. Miguel Houghton. digital business Digital business Prof. Miguel Houghton. digital business Digital business Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Inbound marketing The consumer is proactive in actively seeking out information for their needs, and interactions with brands are attracted through content, search and social media marketing. Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Zero Moment of Truth (ZMOT) A summary of today’s multichannel consumer decision-making for product purchase where they search, review ratings, styles, prices and comments on social media before visiting a retailer. Prof. Miguel Houghton. digital business New communications approaches and consumer behaviour Content marketing The management of text, rich media, audio and video content aimed at engaging customers and prospects to meet business goals, published through print and digital media including web and mobile platforms, which is repurposed and syndicated to different forms of web presence such as publisher sites, blogs, social media and comparison sites. Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Search marketing Companies seek to improve their visibility in search engines for relevant search terms by increasing their presence in the search engine results pages Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Search marketing Companies seek to improve their visibility in search engines for relevant search terms by increasing their presence in the search engine results pages https://www.youtube.com/watch?v=DvwS7cV9GmQ Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Social media A category of media focussing on participation and peer-to-peer communication between individuals, with sites providing the capability to develop user-generated content (ugc) and to exchange messages and comments between different users. http://bit.ly/smartsocialstats Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Social media marketing Monitoring and facilitating customer– customer interaction and participation throughout the web to encourage positive engagement with a company and its brands. Interactions may occur on a company site, social networks and other third-party sites. https://www.youtube.com/watch?v=BS0AfId45zo Prof. Miguel Houghton.  digital business New communications approaches and consumer behaviour Social media marketing Monitoring and facilitating customer– customer interaction and participation throughout the web to encourage positive engagement with a company and its brands. Interactions may occur on a company site, social networks and other third-party sites. https://www.youtube.com/watch?v=Qv6PabPkSdc Prof. Miguel Houghton.  digital business Digital marketing definition Digital marketing involves: Applying these technologies which form online channels to market: Web, email, databases, plus mobile/wireless and digital TV. Prof. Miguel Houghton.  digital business Digital marketing definition Digital marketing involves: To achieve these objectives: Support marketing activities aimed at achieving profitable acquisition and retention of customers... within a multichannel buying process and customer lifecycle. Prof. Miguel Houghton.  digital business Digital marketing definition Digital marketing involves: Through using these marketing tactics: Recognising the strategic importance of digital technologies and developing a planned approach to reach and migrate customers to online services through e-communications and traditional communications. Prof. Miguel Houghton.  digital business Digital marketing definition Digital marketing involves: Through using these marketing tactics: Retention is achieved through improving our customer knowledge (of their profiles, behaviour, value and loyalty drivers), then delivering integrated, targeted communications and online services that match their individual needs Prof. Miguel Houghton.  digital business Digital media channels Online communications techniques used to achieve goals of brand awareness, familiarity, favourability and to influence purchase intent by encouraging users of digital media to visit a website to engage with the brand or product and ultimately to purchase online or offline through traditional channels. Prof. Miguel Houghton.  digital business Digital media channels Online communications techniques used to achieve goals of brand awareness, familiarity, favourability and to influence purchase intent by encouraging users of digital media to visit a website to engage with the brand or product and ultimately to purchase online or offline through traditional channels. Prof. Miguel Houghton.  digital business Digital media marketing opportunities Reach – Over 2 billion users globally – Connect to millions of products Richness – Detailed product information on 20 billion+ pages indexed by Google. Blogs, videos, feeds… – Personalised messages for users Affiliation – Partnerships are key in the networked economy. Prof. Miguel Houghton. digital business online value proposition (OVP): The 6 C´s Content: ’content is king’. Convenience: ’24 x 7 x 365´. Customisation: ’personalisation’. Choice: ’breath & depth’. Community: “discuss anything” Cost reduction: “ low-cost place of purchase“ Prof. Miguel Houghton. digital business 1.5 Digital Business models Prof. Miguel Houghton.  digital business Business model There are three different perspectives from which a business model can be viewed Prof. Miguel Houghton  digital business Business model Revenue models Describe methods of generating income for an organisation Prof. Miguel Houghton  digital business Business model Revenue models CPM (cost per mille) display advertising on-site. This is the traditional method by which site owners charge a fee for advertising. Prof. Miguel Houghton  digital business Business model Revenue models CPC advertising on-site (pay-per-click text ads). Advertisers are charged not simply for the number of times their ads are displayed, but according to the number of times they are clicked upon. Prof. Miguel Houghton  digital business Business model Revenue models Sponsorship of site sections or content types (typically fixed fee for a period). A company can pay to advertise a site channel or section. Prof. Miguel Houghton  digital business Business model Revenue models Affiliate revenue (CPAff): a process where publishers earn a commission by promoting a product or service made by another retailer or advertiser using an affiliate link. Affiliate revenue is commission-based, for example Amazon books are displayed on Dave Chaffey’s site Smart Insights Prof. Miguel Houghton  digital business Business model Revenue models Transaction fee revenue. A company receives a fee for facilitating a transaction. Examples include eBay and PayPal, Prof. Miguel Houghton  digital business Business model Revenue models Subscription access to content or services. A range of documents can be accessed from a publisher for a fixed period. Prof. Miguel Houghton  digital business Business model Revenue models Pay-per-view access to documents. Here payment occurs for single access to a document, video or music clip that can be downloaded. Prof. Miguel Houghton  digital business Business model Revenue models Subscriber data email marketing. The data a site has about its customers are also potentially valuable, since it can then send different forms of email to its customers from either the publisher or third parties. Prof. Miguel Houghton  digital business Business model Revenue models Calculating revenue for an online business Site owners must develop models of potential revenue depending on the mix of revenue-generating techniques from the four main revenue options they use on the site. Prof. Miguel Houghton  digital business Business model Revenue models Calculating revenue for an online business Site owners must develop models of potential revenue depending on the mix of revenue-generating techniques from the four main revenue options they use on the site. Prof. Miguel Houghton  digital business Business model Revenue models Calculating revenue for an online business Site owners must develop models of potential revenue depending on the mix of revenue-generating techniques from the four main revenue options they use on the site. Prof. Miguel Houghton  digital business Business model Revenue models Calculating revenue for an online business Site owners must develop models of potential revenue depending on the mix of revenue-generating techniques from the four main revenue options they use on the site. Prof. Miguel Houghton digital business 1.5.1 Canvas Digital Business model Prof. Miguel Houghton.  digital business Business model An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue. (Timmers - 1999) Prof. Miguel Houghton digital business Business Model Canvas Prof. Miguel Houghton digital business Valuing tech start-ups 1 Concept 4 Traffic 2 Innovation 5 Financing 3 Execution 6 Profile https://www.smartinsights.com/digital-marketing-strategy/online-value- proposition/start-with-why-creating-a-value-proposition-with-the-golden- circle-model/ Prof. Miguel Houghton  digital business Digital business DB is how businesses apply digital technology and media to improve the competitiveness of their organisation through optimising internal processes with online and traditional channels to market and supply. https://www.youtube.com/watch?v=6Wq6xQxaLGE https://www.youtube.com/watch?v=gqy70cDPwRY https://www.youtube.com/watch?v=y60yeHak5bE https://www.youtube.com/watch?v=mSm4db_ARQM Prof. Miguel Houghton.  digital business The Internet ‘The Internet’ refers to the physical network that links computers across the globe. It consists of the infrastructure of network servers and wired and wireless communication links between them that are used to hold and transport data between the client devices and web servers. https://cmsw.mit.edu/joi-itos-9-principles-media-lab/ https://www.youtube.com/watch?v=Up6AiNFJI3g Prof. Miguel Houghton. UC3M Topic 2. Environment and digital market Digital Business Content 2. Environment and digital market. 2.1. Environment and digital transformation 2.2. Digital market map (customer segments, searching intermediaries, intermediaries and media sites, destination sites) 2.3. Ecosystems, plataforms and digital communties 2.4. Analysis of the digital market environment 2.4.1.Micro environment (customers, intermediaries, competitors suppliers) 2.4.1.1. Digital consumer (users and internet penetration, users and e- commerce penetration, digital buyers, purchasing devices, types of shops, types of products, use of browsers, behavior, buying model, characteristics, drivers, etc.) 2.4.2. Macro environment (economic, legal (General Data Protection Rules-GDPR, …), cultural, social, technologic) 2.4.3. Some more laws about digital markets (Moore, Metcalfe, Amara, Gilder, Disruption, etc.) 2.4.4. Regulations. Electronic communications Markets. Digital Market Law DML), Digital Services Law (DSL) 2.1. Environment and digital transformation. Topic 2. Environment and digital market digital business and e-commerce 2.1. Environment and digital transformation. digital business and e-commerce The business environment VUCA concept was coined almost 30 years ago by management advisors and popularized by military strategists. digital business and e-commerce The business environment The current business environment is turbulent & characterized by: Volatility, Uncertainty, Complexity & Ambiguity, digital business and e-commerce The business environment The current business environment is turbulent & characterized by: Volatility, Everything changes so fast, and resilience and adaptability are key. digital business and e-commerce The business environment The current business environment is turbulent & characterized by: Uncertainty, as a result of this volatility, predicting what changes will look like becomes more complicated, and there might even be several trends happening all at once. digital business and e-commerce The business environment The current business environment is turbulent & characterized by: Complexity speed and the inability to pinpoint what’s going on lets a certain amount of false information circulate and results in the need to analyze everything from several points of view digital business and e-commerce The business environment The current business environment is turbulent & characterized by: & Ambiguity, heterogeneity becomes the norm, and it is impossible to summarize the direction that the world is heading. https://www.youtube.com/watch?v=72AzCY45fKU digital business and e-commerce The business environment VUCA concept however, it is now starting to become increasingly obsolete due to the speed of change we are all experiencing. digital business and e-commerce The business environment What used to be volatile has ceased to be reliable. People do not feel uncertain anymore, they are anxious. digital business and e-commerce The business environment Things are not complex anymore, instead they obey non-linear logical systems. What used to be ambiguous appears incomprehensible to us today. digital business and e-commerce The business environment Situations in which conditions aren’t simply unstable, they’re chaotic… In which outcomes aren’t simply hard to foresee, they’re completely unpredictable… And situations where what happens isn’t simply ambiguous, it’s incomprehensible digital business and e-commerce The business environment VUCA environment has evolved, which calls for a new terminology, a new language to explain the changed world. So why BANI? digital business and e-commerce The business environment Brittle(fragile) Easy to shatter, subjected to a total and sudden failure. It is the idea is that we are susceptible to catastrophe at any time. digital business and e-commerce The business environment Anxious Fear that any choice we can make might be the wrong one. There are now so many uncertainties (thanks to our VUCA world) that they generate immense anxiety and a constant feeling of impotence. digital business and e-commerce The business environment Nonlinear Disconnection between cause and effect in time, proportion, perception. What was complex became, in turn, nonlinear, without a single meaning, leading to multiple destinations. digital business and e-commerce The business environment Incomprehensible Extremely difficult, if not impossible, to understand. Attempts to find all the answers no longer make so much sense. digital business and e-commerce The business environment Both VUCA and BANI offer us frameworks that we can use to decode what is happening around us, and subsequently, we can cope with external events. digital business and e-commerce Digital business transformation Significant changes to organizational processes, structures and system implemented to improve organizational performance through increasing the use of digital media and technology platforms. digital business and e-commerce Digital business transformation “DIGITAL TRANSFORMATION IS THE USE OF DIGITAL TECHNOLOGIES TO RADICALLY IMPROVE PERFORMANCE OR REACH OF ENTERPRISES” MIT Sloan Center digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Strategy: D.T must be aligned with the corporate goals and strategies and should be led and sponsored from the Top Management. digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Business Model: Digitalization open the doors to new business models and changes to the existing ones. digital business and e-commerce Digital business transformation Organizations must consider multiple axis: People: People are the most valuable company´s asset, requiring new profiles and digital competences. digital business and e-commerce Digital business transformation Organizations must consider multiple axis: People: It´s now key inside the organizations the knowledge sharing and talent management. digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Process: It´s critical to review the processes in the organization to optimize them thanks to the use of new tech and new ways of work. digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Process: Automatization is key and the “real- time” adaptation thanks to IoT, Big Data and AI. digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Work organization: There is very relevant the work methodology “Agile”, that looks for reducing delivery times in products and services, improving the quality and customer satisfaction … digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Work organization: … using collaborative working models that incorporates customer visions since the early steps in the design…  digital business and e-commerce Digital business transformation Organizations must consider multiple axis: Work organization: … Applying new methodologies as new working habits such us the teleworking or the professionals “Knowmad” (nomads of the knowledge). https://www.youtube.com/watch?v=y60yeHak5bE  Do we depend, each time more, what we are in Internet? Thinks, make opinions, relations … Internet is like a great market  VUCA Environment ▪ The current busines environment is turbulent(unstable), and characterized by Volatilily, Uncertainty, Complexity y Ambiguity, where the changes are continuous and faster, being fundamental the organizations adaptability to this environment to maintain the survival and growing through a sustainable competitive advantage. ▪ The VUCA (Volatility, Uncertainty, Complexity & Ambiguity) is a consequence of the globalization and the rise of TIC´s. ▪ The current context sets out important challeges for the organizations, that must adapt continuosly and quickly to the change, tackling for that the Digital Transformation. On the other hand, also comes with big strategic growth oportunities and incomes increases. “The only steady is the change” (Heráclito)  BANI Environment ▪ There is another option for the new environment as BANI - Brittle (B), Anxious (A), No-linear (N), Incomprehensible (I)-: ▪ A Brittle world: several of the social systems, economics and thechnological are weaker than they appear; are systems whose performance, instead of diminishing gradually, they break down in the precise moment that and input excedes a determined level. ▪ A world that generates anxiety: we face continuosly to new situations that we are not familiarized, they surprise and desorientate us; there are too many things that we cant´control them. ▪ A world in which causes and effects don´t fit each other : the natural, economic and social systems are “non linears”, which means that if we put in an input in one system not always get the same output; in the nature, in the economy and in the society the linear is the exception and the “non-linear” is the rule. ▪ A world that we can´t understand: people always look for explaining the situations and fenomena that surround us; the problem is that, often, our explaining are too simple and make us to take mistaken decisions. This risk is even higher in an every day more complex world. Some numbers of Digital Environment Fuente: Hootsuite & We are Social. Digital 2021. [Ref. 2]. Some number of Digital Environment Fuente: Hootsuite & We are Social. Digital 2021. [Ref. 2].  Some numbers of Digital Environment FUENTE: https://ticsyformacion.com/2017/05/13/cuanto-tardaron-estos-productosservicios-en-llegar-a-50-millones- de-usuarios-infografia/ https://www.elrincondelombok.com/infografias/cuanto-tardaron-algunos-medios-en-llegar-a-50-millones-de- usuarios-infografia-infographic/ Some numbers of Digital Environment B2C e-commerce sales world wide B2C e-commerce sales world wide increased 122% in the period 2012-2018, reaching 2.356 MM USD (Source: Statista [Ref.4]) In 2021, online sales on B2B ecommerce sites, log-in portals and marketplaces increased 17.8% to $1.63 trillion from $1.39 trillion in 2020. B2B ecommerce in 2021 grew 1.17 times faster than the growth of all U.S. manufacturing and distributor sales. (Source: https://www.zety.com/b2b_sales/statistics) The new buyer behavior of the digital consumer open a new world of business opportunities, non existing up to now. Globalization “Process in which economies and CARACTHERISTICS markets, with the development of - Use of new technologies. communication technologies, - Acces to bigger number of adquire a worlwide dimension, so products & services. that depend much more of the - Ease the mobility and external markets and less to the cultural integration. regulatory actions of the governments” (RAE) ADVANTAGES FOR THE RISKS FOR THE ORGANIZATIONS ORGANIZATIONS - Major competition. - Acces to global markets and major - Better informed and more demanding number of users. consumers. - Bigger economies of scale. - Reduction of the profits. - Quick access to new technologies - Continuos innovation to maintain the that allow more efficiency in the competitive advantage. organization process. Digital Transformation “It´s perfect to have a Tablet and an Internet conection, but it is not enough”(Rosa Garcia. Presidenta Siemens). Digital Transformation is the process for which the companies reorientate and transform their strategies, process and working methodologies thanks to the implementation of the new techs, with the aim of improving the productivity and competitiveness, supplying a major added value for their customers. Digital Transformation Why grows so much the uncertainty in the digital world? ▪ Our world is more depending to changes, uncertainty and surprises tan never before… ▪ The speed of change, the acceleration, is one of the constants of the progressions in the digital world. ▪ It´s difficult to think with the perspective of change when you are inside it. ▪ A volátil, uncertain, ambigous, complex ( VUCA envirnoment). ▪ The worst strategy is doing nothing, the lack of action. We need more knowledge that make us to anticipate, flexibility that make us to adapt and react to the environment, assumig risks to the less posible cost.  Digital Transformation ▪ A great mortal leap? ▪ From the disolution of the frontiers of the supply chain to the desintermediation. ▪ The value is created, destroyed and changed of hands. ▪ A “human tech” as an extension of we are. ▪ A necessary process of deep technological and cultural change that all the organization must carry out “to be up” to their digital customers ▪ Digital economy should not be perceived as a threat, but as a great opportunity. “Sometimes you just have to jump off the cliff and build your wings on the way down” Ray Bradbury  Digital Transformation – Main focus ▪ With regard to tackle the digital transformation, the organizations must consider multiple axis: ▪ Strategy: D.T must be aligned with the corporate goals and strategies and should be led and sponsorised from the Top Management. ▪ Business Model: Digitalization open the doors to new business models and changes to the existing ones. ▪ People: People are the most valuable company´s asset, requiring new profiles and digital competences. It´s now key inside the organizations the knowledege sharing and talent management. In the Digital Transformation, the technology is not a goal, but a mean  Digital Transformation – Main focus ▪ With regard to tackle the D.T the organizations must consider multiple axis: ▪ Process: It´s necessary to review the processes in the organization to optimize them thanks to the use of new tech and new ways of work. There´re key the robots, the automatization and the “real-time” adaptation thanks to IoT, Big Data and AI. ▪ Work organization: There is very relevant the work methodology Agile, that looks for reducing delivery times in products and services, improving the quality and customer satisfaction using collaborative working models that incorporates customer visions since the early steps in the design. On the other hand, new methodologies have created new working habits such us the teleworking or the professionals “Knowmad” (nomads of the knowledge). Digital Transformation - Keys WHAT HOW Components COMMUNICATION Factors  Digital Transformation – Steps to manage the change according to Kotter ▪ To create a sense of urgency. ▪ To make a coalition. ▪ To create a vision for change. ▪ To communicate the vision. ▪ To eliminate the obstacles. ▪ To guarantee short term triumphs. ▪ To build over the change. ▪ To anchor the change inside the corporate culture. FUENTE: John Kotter “Liderando el cambio”; https://www.adictosaltrabajo.com/2016/04/13/los-8-pasos-de-kotter-para-gestionar-el- cambio/ Digital Transformation – Impact in the organizations ▪ Current keys: ▪ To improve the organization agility. ▪ More structured focus in digital services. ▪ New methods of inorganic growing ▪ Holistic approach to analytics. ▪ A wide and diversified network. ▪ Process automation. ▪ Perspective and structure change. FUENTE: EY Digital Transformation – Challenges and Opportunities. ▪ Two kind of actors: ▪ Digital Natives (pure digital) and ▪ Traditional business (Brick and mortar) ▪ Challenges: ▪ Digital Natives have to demonstrate that are viable projects competing with traditional business. ▪ Traditional business will have to demonstrate that can compete with digital natives and integrate new technologies with inherited systems. ▪ Opportunities: ▪ Digital Natives: to configure as new economic actors. ▪ Traditional business: costs reduction, increase profits and improve efficiency.  Digital Transformation – Challenges and Opportunities ▪ Examples of new digital native actors: ▪ Fintech (Finance+Technology): Digital companies that arose after 2008 crisis, that offer new finantial products and services, thanks to the use of new tech mainly in two areas: ▪ Alternative financing: Crowdfunding (Bestaker) y Crowdlending (Arboribus). ▪ Transactional services: Offer of financial services with lower costs thanks to the elimination of banking intermediation. Some examples: personal finance management application (Fintonic), safe payment platforms (PayPal), trading social online of finantial instruments (Etoro), Currency Excange (Kantox). ▪ Insurtech (Insurance+Technology): Digital companies that offer assurance services, leveraging in the use of new technologies. ▪ Areas of the supply chain to focus: to improve the customer experience, on line hiring, customized products. ▪ Some examples: CoverWallet (Enterprise Insurances), Rastreator (On line comparison tool), Klinc by Zurich (On line subsidiary of Zurich insurances).  Impact of the new tech in business ▪ The implementation of the new tech has implied a change in the current business paradigm: ▪ Transformation of the new business models (example: new C2C models). ▪ Change in the companies supply chain, and in the productive process (examples; new strategies and marketing & sales tools, digital transformation of logistic and operations). ▪ Hyper-segmentation of the target market. ▪ Massive personalization, hyper-customized products & services production and very fitted to the demand, low cost/high profitability. ▪ The Customer is in the center of the company strategy and decisions, being engaged in the productive processes. ▪ Services Orientation (servitization). Generalization of models based in suscription and offer of services XaaS (IaaS, PaaS y SaaS) ▪ People are the most important asset of the organizations, requiring new competences and talent management.  Impact of the new tech in business ▪ The hyperconnectivity and the processing capacity that brings the TIC are the key of the current industrial era (Industry 4.0), allowing the generation and massive processing in “real-time” of data, that become in key information to the decision making of the organizations and actions to change in all the business environment such as: ▪ Strategy definition. ▪ Productive process optimization. ▪ Product & Service design. ▪ Customers relationship. ▪ Corporative Image (Digital Branding). ▪ Finance. ▪ Human Resources.  Digital Transformation impacts A digital business focus in how the technology allows to the enterprises to create new values and experiences that differentiate them and give them a competitive advantage over others. ▪ New ways to commercialize products & services. ▪ Improve customer experience. ▪ Process optimization. ▪ Strategic thinking. ▪ Corporate culture change. ▪ Social Responsibility. ▪ Data Analysis (Data– Information–Knowledge- Insight –Wisdom)  Technological challenges for the enterprises ▪ A 360º change. ▪ More agile, faster. ▪ Data, data and more data. ▪ User privacy. ▪ Omnichannel. ▪ A new Marketing. ▪ Think global. ▪ HHRR adaptation (search and define the correct profiles, just as the correct leaders). ▪ Formulate the accurate digital strategy to face threatens and opportunities. ▪ Open Innovation ▪ Cibersecurity  Data - Driven Company Data - driven company, it is the name for companies that utilize the data as the main asset in their decisions making in all their process inside the company. They make it in optimum way by the use of advanced analytical techniques such us Artificial Intelligence (A.I). Advantages: How to become in a data-driven Productivity increase Enterprise? Help to better understand the To settle a data strategy. market, the customers and the Democratize the data. competition. Set up a data collection culture. Monitorize the market. Acelerate the comprehension Improve product/service. speed. Make profitable the Marketing Mesaure the value of Data Science. investments. Apply a structure of data Process optimization. governance. Increase the competitiveness Fuente: Blog Think Big Empresas Digital Business. Need to redefine. Need to redefine: Data systematic Analysis. How do we compete? How do we create and capture value? 2.2. Digital Market Map ( customer segments, searching intermediaries, intermediaries and media sites, destination sites) Topic 2. Environment and digital market. digital business and e-commerce Digital Market Map digital business and e-commerce Digital Market Exchanges of information and commercial transactions between consumers, businesses and governments completed through different forms of online presence such as search engines, social networks, comparison sites and destination sites. digital business and e-commerce Digital Market Path to purchase: The different sites, channels, devices and information sources that consumers use to inform their purchase decision for a product or service. digital business and e-commerce Digital Market Path to purchase: The different sites, channels, devices and information sources that consumers use to inform their purchase decision for a product or service. Also known as conversion pathways on a site. digital business and e-commerce Digital Market Map digital business and e-commerce Digital Market Map – elements Customers Different target segments for an online business in order to then understand their online media consumption, buyer behavior and the type of content and experiences they will be looking for from intermediaries and your website. digital business and e-commerce Digital Market Map – elements Online intermediaries Websites which help connect web users with content they are seeking on destination sites. digital business and e-commerce Digital Market Map – elements Online intermediaries Search engines and shopping comparison sites and traditional brokers, directories and newspaper and magazine publishers & online. digital business and e-commerce Digital Market Map – elements Online intermediaries Search Intermediaries These are the main search engines in each country: digital business and e-commerce Digital Market Map – elements Online intermediaries Intermediaries, influencers and media sites Media sites and other intermediaries such as aggregators, affiliates and influencers (blogs) are often successful in attracting visitors via search or direct since they are mainstream brands digital business and e-commerce Digital Market Map – elements Online intermediaries Intermediaries, influencers and media sites (a) Mainstream news bloomberg.com (b) Social networks LinkedIn.com (c) Niche or vertical media smartinsights.com digital business and e-commerce Digital Market Map – elements Online intermediaries Intermediaries, influencers and media sites (d) Price comparison or aggregators https://www.moneysupermarket.com (e) Super-affiliates. https://v2-affiliate.taxi2airport.com (f) Niche affiliates, influencers or bloggers moneysavingexpert.com https://influencermarketinghub.com/top- instagram-influencers-in-2019/ digital business and e-commerce Digital Market Map – elements Destination sites: Typically a retailer or manufacturer site with sales and service information. Intermediaries such as media sites may be destination sites for some. digital business and e-commerce Digital Market Map – elements Destination sites: These are the sites that the marketer is trying to generate visitors to, whether these are transactional sites, like retailers, financial services or travel companies or manufacturers or mercedes-benz.com brands. digital business and e-commerce In Sum: Digital Market Map  digital business and e-commerce Marketplace channel structures Marketplace & channel structures: The way a manufacturer or organisation delivers products and services to its customers digital business and e-commerce Marketplace channel structures e- marketplace: A virtual marketplace such as the Internet in which no direct contact occurs between buyers and sellers. digital business and e-commerce Marketplace channel structures Disintermediation: The removal of intermediaries such as distributors or brokers that formerly linked a company to its customers.  digital business and e-commerce Marketplace channel structures Reintermediation (countermediation): The creation of new intermediaries between customers and suppliers providing services like supplier search and product evaluation. www.alibaba.com Paypal.com  digital business and e-commerce Location of trading in the marketplace Seller-​controlled The main home page of the company. Dell Computers Armani digital business and e-commerce Location of trading in the marketplace Neutral sites Independent evaluator intermediaries that enable price and product comparison. Walmart Amazon digital business and e-commerce Location of trading in the marketplace Buyer-​controlled Buyer initiates the market-​making http://powerwest.com.au  digital business and e-commerce Omnichannel strategy Fully integrates all consumer touchpoints and data sources to provide consumers with a seamless experience, regardless of how or where they choose to interact with the brand (i.e. desktop or mobile device, by telephone or in a physical store, etc.).  digital business and e-commerce Omnichannel marketplace models Customer journey A description of modern omnichannel buyer behaviour as consumers use different media to select suppliers, make purchases and gain customer support  digital business and e-commerce Online marketplace environmental analysis Environmental Situation analysis scanning and analysis Organisation’s external Monitoring the environment and environment internal processes and events and to inform its strategies. responding accordingly digital business and e-commerce Commercial mechanisms and online transactions digital business and e-commerce Commercial mechanisms and online transactions digital business and e-commerce Commercial mechanisms and online transactions digital business and e-commerce Commercial mechanisms and online transactions digital business and e-commerce The Digital Consumer digital business and e-commerce The Digital Consumer In the digital era, the customer is placed at the center of the company's strategy and decisions, changing the power relationship between consumers and enterprises and even the own role of the consumers. digital business and e-commerce The Digital Consumer The massive access to real-time information implies that the bargaining power of the customers in front of the companies increases. digital business and e-commerce The Digital Consumer In the Digital Era, consumers assume a much more active role, integrating themselves into the organization's supply chain. digital business and e-commerce Digital Consumer – Characteristics Producer of contents, opinions, trends The Digital Consumer (DC) participates actively in social networks, forums, and blogs, sharing information and experiences, engages in service/product design, and interacts with the companies in different ways. digital business and e-commerce Digital Consumer – Characteristics Well-informed: The DC pays particular attention and credibility to other users' opinions discriminating between relevant information and the one provided by the company oriented to influence his decision. digital business and e-commerce Digital Consumer – Characteristics Well-informed: The DC Before making a buying decision, looks for information from different sources, comparing several alternatives. digital business and e-commerce Digital Consumer – Characteristics Low loyalty: The DC Choose the products and services based on their preferences, experiences, and available information at the moment of the purchase, not doubting changing to other products/services if they satisfy their preferences better. digital business and e-commerce Digital Consumer – Characteristics Demanding: The DC know very clearly their needs and decides when and how to consume products & services. They demand quickness and efficiency in customer service. digital business and e-commerce Digital Consumer – Characteristics Demanding: The DC require immediate and relevant information to make a purchasing decision, and if this information is unavailable, they will opt for another alternative. digital business and e-commerce Digital Consumer – Characteristics Real-time service and convenience: The DC expects immediate delivery of the products they acquire and convenience in the purchasing process: payment options, alternative delivery places, or effective return policy. digital business and e-commerce Digital Consumer – Characteristics Omnichannel The DC Interacts through multiple channels (offline and online) and devices (mobiles, tablets, computers, SmartTV), expecting an integrated and uniform user experience. digital business and e-commerce Digital Consumer – Characteristics Community: The DC embraces being part of digital communities actively participating in digital platforms (social networks, forums) and expects to be listened in these fora. digital business and e-commerce Digital Consumer – Characteristics Actively digital: The DC spends a long time connected to the internet and accessing and sharing information in digital media, especially on social networks. digital business and e-commerce Digital Consumer – Characteristics Actively digital: The presence of businesses in these networks is key to building their Brand identity (Digital Branding), promoting their products, and being closer to their potential customers. digital business and e-commerce Digital Consumer – Characteristics Engaged: The DC are socially and environmentally engaged, expecting that businesses have high ethical and moral behaviors, claiming a high Corporate Social Responsibility. digital business and e-commerce 2.3. Ecosystems, plataforms and digital communties digital business and e-commerce Digital ecosystem is a set of information technologies that are interconnected among them. It comes to all the applications that a business uses to manage all the activities. digital business and e-commerce Digital ecosystem Describes the customer behavior or flow of online visitors between search engines, media sites and other intermediaries to an organization and its competitors. digital business and e-commerce Digital ecosystem Major online players such as Facebook & Google have developed their online market ecosystem digital business and e-commerce Digital ecosystem It connects websites through data exchange, giving opportunities to enhance the customer experience and extend their reach and influence. digital business and e-commerce Digital ecosystem Why are so important the digital ecosystems? enhance internal and external communication, with employees, customers and suppliers. Drive process efficiency. Manage data of all business areas. digital business and e-commerce Digital ecosystem Why are so important the digital ecosystems? Enable automation. Focus in key activities that add value to the customer. Accelerate development and launching of new products. digital business and e-commerce Digital ecosystem Why are so important the digital ecosystems? In sum: Ecosystems add value for customers by optimizing data and workflow within the organization and toward customers & suppliers. digital business and e-commerce Why are so important the digital ecosystems? To have better communication: Internal: within the company external: with customers and suppliers. digital business and e-commerce Why are so important the digital ecosystems? Process efficiency: Increased productivity and cost reduction. Data sharing of all business areas. digital business and e-commerce Why are so important the digital ecosystems? Focus in activities that provide value to the customer. To accelerate the creation and launching of new products. digital business and e-commerce Characteristics of a Digital Ecosystem Customer centric Data as the main asset. Automatization Global, digital business and e-commerce Characteristics of a Digital Ecosystem Dinamic, Network effect. Gateways access to products/services of another markets. digital business and e-commerce Internal digital ecosystems It comes to all the applications that a business uses to manage all the activities. digital business and e-commerce Internal digital ecosystems The e-mail, social networks, ofimatic and CRM are some examples of their components. digital business and e-commerce Digital Plataforms Digital platforms or virtual platforms are Internet spaces that allow the execution of diverse applications or programs in a same place to satisfy different needs. digital business and e-commerce Digital Plataforms Platforms have different functions that help solving end users distinct problems in an automated manner, using less resources. digital business and e-commerce Digital Plataforms The main goal of the digital platforms is to facilitate the execution of tasks through programs or applications in the same place of the web. digital business and e-commerce Types of digital Platforms Educational platforms: e-College, Blackboard, Moodle. digital business and e-commerce Types of digital Platforms Social Platforms: Facebook, Twitter, Instagram, Whatsapp. digital business and e-commerce Types of digital Platforms Music Plataforms: Spotify Apple Music / iTunes, Amazon Music digital business and e-commerce Types of digital Platforms E-commerce Platforms: Amazon, eBay. Mercado Libre digital business and e-commerce Types of digital Platforms Stock-market Platforms: Bloomberg CNBC XTB, eToro. digital business and e-commerce Types of digital Platforms Images Platforms: Pinterest, Pixabay, Pexles. digital business and e-commerce Types of digital Platforms Specialized Platforms: Hostgator, Panda, Go Daddy, Google Translate digital business and e-commerce Types of digital Platforms Payment Platforms: Payoneer, Payza, PayPal, Skill. digital business and e-commerce Types of digital Platforms Games Platforms: RuneScape, World of Warcraft, Star Trek Online, EVE Online. digital business and e-commerce Types of digital Platforms Localization Platforms: Google Earth, Google Maps. Maps (Apple) digital business and e-commerce Types of digital Platforms News Platforms: Premium Times The Cable Guardian Daily Post digital business and e-commerce Types of digital Platforms Mobility provider: Uber Lift Underground digital business and e-commerce Types of digital Platforms Travel Agency Platforms: Booking Airbnb Expedia Tripadvisor digital business and e-commerce Digital communities It is a set of individuals that share common elements, such as: Language, habits, vision of the world, age, digital business and e-commerce Digital communities It is a set of individuals that share common elements, such as: geographical location, social status and roles. digital business and e-commerce Digital communities It is a group of people that connect through a person, values, brands, interests, and around it, interacting through digital or electronic media channels. digital business and e-commerce Digital communities Members share common interests and a sense of belonging. digital business and e-commerce Types of Digital communities Social Networks Instantaneous messaging Forum Wiki Pages Blogs digital business and e-commerce Digital communities Benefits for Business ▪ Know customer demand ▪ Generate new business ideas ▪ Analyze the competition ▪ Promote connections with potential customers digital business and e-commerce Digital communities Benefits for Business ▪ Earn Trust ▪ Strengthen values ▪ Measure the “engagement” ▪ Reduce marketing costs digital business and e-commerce The Top 10 Digital Community Platforms 2022 ▪ Thinkific ▪ Tribe ▪ Mighty Networks ▪ Slack ▪ Discord digital business and e-commerce The Top 10 Digital Community Platforms 2022 ▪ Facebook Groups ▪ Discourse ▪ Vanilla Forums ▪ Circle ▪ Reddit Prof. Miguel Houghton 2.4. Analysis of the digital market environment. Topic 2. Environment and digital market. 2.4.1. Micro environment (customers, intermediaries, competitors, suppliers) Topic 2. Environment and digital market 2.4. Analysis of the digital market digital business and e-commerce Micro Environment digital business and e-commerce Analysis of the competitive environment The organization should be aware of the environment in which competes, tackling four processes: Environment exploration: Environment surveillance Competitive intelligence Environment forecast: digital business and e-commerce Analysis of the competitive environment The organization should be aware of the environment in which competes, tackling four processes: Environment exploration: the ongoing review aimed to identify current and future changes and be able to anticipate decisions that respond to these changes. digital business and e-commerce Analysis of the competitive environment The organization should be aware of the environment in which competes, tackling four processes: Environment surveillance: Ongoing analysis to monitor trends, models, or patterns in the environment, and their impact on the competitive setting, for the organization to adopt informed strategic decisions. digital business and e-commerce Analysis of the competitive environment The organization should be aware of the environment in which competes, tackling four processes: Competitive intelligence: Tracking the behavior of the competition by compiling and processing market information to estimate its strengths & weaknesses to anticipate the organization's actions to maintain competitive advantages. digital business and e-commerce Analysis of the competitive environment The organization should be aware of the environment in which competes, tackling four processes: Environment forecast: Projecting the possible behavior and evolution of the environmental variables to anticipate potential changes that will affect the organization. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Michael Porter’s classic 1980 model of the five main competitive forces that affect a company still provides a valid framework for reviewing threats arising in the digital business era. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threats have been grouped into buy-side, sell-side and competitive threats. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats The main difference from the P5F model is the distinction between competitive threats from intermediaries in the buy-side and sell-side of the business digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new digital entrants: The power of online buyers is increased since they have a wider choice and prices are likely to be forced down through increased customer knowledge and price digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new digital entrants: It is Strengthened by the reduction of entry barriers, and more relevant in the retail and services sector than in B2B. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new digital products: This threat can occur from established or new companies. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new digital products: This thread has a tremendous effect in sectors such as publishing (newspaper, magazine, and book) , music and software distribution. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of substitute products and services: Substitution is a significant threat since new digital products or line extension of products can be more readily introduced. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of substitute products and services: The introduction of new substitute products and services should be carefully monitored to avoid erosion of market share. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new business models: This threat can also occur from established or new companies and is related to new methods of service & delivery. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new business models: These threats from existing competitors increase rivalry since price comparison is readily available. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Threat of new business models: Rival digital businesses can innovate and develop new products and introduce alternative business and revenue models with shorter cycle times. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats: Sell side: Customers Bargaining Power: As customer access to digital information about products and services increases radically … digital business and e-commerce Analysis of the competitive environment Assessing competitive threats: Sell side: Customers Bargaining Power: This enabling them to compare options in real time before making a purchasing decision, and this translates into price reductions. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Sell side: Customers Bargaining Power: This is the most considerable thread posed by e- commerce because the power of customers increases when they use internet to evaluate products and compare prices. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Sell side: Customers Bargaining Power: Purchase of some products that have not traditionally been thought of as commodities may become more price- sensitive. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Sell side: Customers Bargaining Power: Commoditization, is the process whereby product selection becomes more dependent on price than differentiating features, benefits, and value‐added services. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Sell side: Intermediaries Bargaining Power: A significant downstream channel threat is the potential loss of partners or distributors if there is a channel conflict resulting from disintermediation. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Sell side: Intermediaries Bargaining Power: Disintermediation is the removal of intermediaries such as distributors or brokers that formerly linked a company to its customers. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Sell side: Intermediaries Bargaining Power: The disintermediation process due to the implementation of the integrated models Direct to Customer (D2C) can generate conflicts in the channel. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Buy side: Suppliers Bargaining Power: When an organization purchases, the bargaining power of its suppliers is reduced since there is wider choice & increased commoditization due to e‐procurement and digital marketplaces. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Buy side: Suppliers Bargaining Power: In the digital market, new intermediaries emerge as comparison platforms that take a growing bargaining power when they integrate into the supply chain. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Buy side: Suppliers Bargaining Power: Commoditization reduces differentiation of suppliers & e-procurement can reduce switching costs, although use of preferred systems can achieve soft lock‐in. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Buy‐side: Customers Bargaining Power: Soft lock‐in occurs in B2B relationships when the organization forms strong e-links with customers, deepening the relationship & increasing switching costs. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Buy‐side: Intermediaries Bargaining Power: Threats from buy-side intermediaries such as B2B exchanges are fewer than those from sell-side, but risks arising from using these services should be considered. digital business and e-commerce Analysis of the competitive environment Assessing competitive threats Buy‐side: Intermediaries Bargaining Power: These risks include the cost of integration with intermediaries if different integration standards are required for each, posing also a threat of increasing commission once the relationship is established. 2.4.2. Macro environment (economic, legal – RGPD (DPGL)-, culture, social, technologic) Topic 2. Environment and digital market 2.4. Analysis of the environment of the digital market digital business and e-commerce Macro Environment and SLEPT Analysis. digital business and e-commerce The macro-environment digital business and e-commerce The macro-environment digital business and e-commerce The macro-environment & SLEPT analysis Social elements include: culture demographics domestic structures affluence/wealth religion digital business and e-commerce The macro-environment & SLEPT analysis The main motivations of consumers for the use of digital networks and platforms are: Being part of Communities. Entertainment. Product Testing. Search for info on Products and Services. digital business and e-commerce The macro-environment & SLEPT analysis Legislative changes include: General Data Protection Reg. disability and discrimination law brand and trademark protection intellectual property rights contract law online advertising law. digital business and e-commerce The macro-environment & SLEPT analysis internet governance Principles: The protection of fundamental rights and freedoms the non-existence of monopolies, digital business and e-commerce The macro-environment & SLEPT analysis internet governance Principles: The responsibilities of the states, reinforcing the power of action of Internet users: universal access decentralized management, digital business and e-commerce The macro-environment & SLEPT analysis internet governance Principles: the stability, solidity and resistance of the Internet, the openness and interoperability of the network digital business and e-commerce The macro-environment & SLEPT analysis internet governance Principles: … and its neutrality, and the preservation of cultural and linguistic diversity. digital business and e-commerce The macro-environment & SLEPT analysis internet governance Principles: Net Neutrality …without charging users a fee depending on the content, web page, platform or application they access… digital business and e-commerce The macro-environment & SLEPT analysis internet governance Principles: Net Neutrality …nor according to the type of equipment, device or communication method used for access. digital business and e-commerce The macro-environment & SLEPT analysis Customer data and information Key asset for digital companies in order to adapt their strategy and personalize their offer of products and services. digital business and e-commerce The macro-environment & SLEPT analysis Customer data and information Different types of data are distinguished - Contact information: name. address. email. digital business and e-commerce The macro-environment & SLEPT analysis Customer data and information Different types of data are distinguished - Profile: gender, age, profession, income level. digital business and e-commerce The macro-environment & SLEPT analysis Customer data and information Different types of data are distinguished - Platform usage data: number of visits to a site, type of access devices). digital business and e-commerce The macro-environment & SLEPT analysis Customer data and information Companies must ensure the proper treatment and protection of data, guaranteeing the privacy of individuals, and compliance with the corresponding legal framework. digital business and e-commerce The macro-environment & SLEPT analysis What is personal data? Any information related to an identified or identifiable natural person, regardless of the technology used in its treatment or storage. digital business and e-commerce The macro-environment & SLEPT analysis Personal data is: Name and surname, Home address, Email address, of the type [email protected], Identity card number. digital business and e-commerce The macro-environment & SLEPT analysis Personal data is: Location data (such as the location data function of a mobile phone). Internet Protocol (IP) address. The identifier of a cookie. Medical data that could be a symbol that uniquely identifies a person. digital business and e-commerce The macro-environment & SLEPT analysis Personal data is not: Commercial registration number. Email address, of the type [email protected] Anonymized data. digital business and e-commerce The macro-environment & SLEPT analysis Customer data and information In the EU, public entities and private companies that handle personal data must comply with the General Data Protection Regulation (GDPR). https://www.youtube.com/watch?v=j6wwBqfSk-o digital business and e-commerce The macro-environment & SLEPT analysis Key aspects of the GDPR Personal data must be processed in a lawful, loyal and transparent manner, being kept only for the necessary time for the purposes of the processing. digital business and e-commerce The macro-environment & SLEPT analysis GDPR - To exercise these rights, If a data protection officer is available (DPO) people can contact the officer directly with their request. digital business and e-commerce The macro-environment & SLEPT analysis GDPR - To exercise these rights, The company or organization must respond to requests without undue delay and no later than within one month. digital business and e-commerce The macro-environment & SLEPT analysis Taxation: There are different views on the application of taxes to electronic commerce. The United States advocates that transactions over the Internet be exempt from taxes. digital business and e-commerce The macro-environment & SLEPT analysis Taxation: In the European Union, the new legislation that entered into force in July 2021 seeks that VAT is paid where the products purchased are consumed, or where the services that are being paid for are provided. digital business and e-commerce The macro-environment & SLEPT analysis Taxation: Different EU countries have implemented specific taxation to large technology companies with a percentage (variable depending on the country) on income derived from online advertising services, mediation online and data transmission (“Google Tax”). digital business and e-commerce The macro-environment & SLEPT analysis Taxation: The EU has the objective of defining a single taxation model for digital services from 2023. digital business and e-commerce The macro-environment & SLEPT analysis Economy changes include: market growth employment inflation rate interest rates monetary/fiscal policies foreign exchange rates digital business and e-commerce The macro-environment & SLEPT analysis The economic development of the countries will determine the potential of e-commerce and digital businesses digital business and e-commerce The macro-environment & SLEPT analysis The economic indicators with the greatest impact for e-business are: Development and quality of telecomm infrastructures. Cost of access to telecomm infrastructures. digital business and e-commerce The macro-environment & SLEPT analysis Technological changes: New technology is changing the way that people and businesses do things, from connecting with others to purchasing products and services. digital business and e-commerce The macro-environment & SLEPT analysis Technological changes - Key challenges: Ensure access to the technological infrastructure guaranteeing: information processing capacity, high connectivity and speed of transmission. digital business and e-commerce The macro-environment & SLEPT analysis Technological changes - Key challenges: Digital carbon footprint. the CO2 emissions resulting from the production, use and data transfer of digital devices and infrastructure. digital business and e-commerce The macro-environment & SLEPT analysis Technological changes - Key challenges: Any Digital Business has to identify and solve the SLEPT factors that affect their environment, both at the beginning of the business, as in its evolution. 2.4.3. Some digital laws of digital markets (Moore, Metcalfe, Amara, Gilder, Disruption, …) Topic 2. Environment and digital market 2.4. Analysis of the digital market environment Digital laws ▪ Moore ▪ Scale economies ▪ Metcalfe – Network economies ▪ Amara ▪ Gilder ▪ Disruption (Downes & Mui) ▪ First to market ▪ Complementary goods law ▪ Others  digital business and e-commerce Online Ecosystems Moore's Law It states that the number of transistors on a microchip doubles about every two years, though the cost of computers is halved. https://www.youtube.com/watch?v=basGrfRDqts&t=101s  digital business and e-commerce Online Ecosystems Moore's Law Another tenet of Moore's Law says that the growth of microprocessors is exponential.  digital business and e-commerce Online Ecosystems Moore's Law One of the economic impacts of the law is that computing devices continue to show exponential growth in complexity and computing power…  digital business and e-commerce Online Ecosystems Moore's Law … while effecting a comparable reduction in cost to the manufacturer and the consumer.  digital business and e-commerce Online Ecosystems Moore's Law Due to the limitations at the hardware level, in the future the sustained growth of computing capacity will be given by new emerging technologies …  digital business and e-commerce Online Ecosystems Moore's Law new emerging technologies Cloud, hyper-connectivity, Artificial Intelligence, Quantum computing, etc.  digital business and e-commerce Online Ecosystems Returns of scale “Diminishing returns”: Western economies have undergone a transformation from bulk-material manufacturing to design and use of technology—from processing of resources to processing of information,  digital business and e-commerce Online Ecosystems Returns of scale “Diminishing returns”: products or companies that get ahead in a market eventually run into limitations, so that a predictable equilibrium of prices and market shares is reached. ”  digital business and e-commerce Online Ecosystems Returns of scale “Increasing returns”: the underlying mechanisms that determine economic behavior have shifted from ones of diminishing to ones of increasing returns.  digital business and e-commerce Online Ecosystems Returns of scale “Increasing returns”: Companies that best leverage their technology can create cost, talent, and data advantages that, in turn, can be used to price competitively, innovate quickly, and gain market share  digital business and e-commerce Online Ecosystems Returns of scale W. Brian Arthur: “Increasing returns are mechanisms of positive feedback that operate to reinforce that which gains success or aggravate that which suffers loss.”  digital business and e-commerce Online Ecosystems Returns of scale W. Brian Arthur: Increasing returns are the tendency for that which is ahead to get further ahead, for that which loses advantage to lose further advantage.  digital business and e-commerce Online Ecosystems “Metcalfe’s Law” “..a network’s value is proportional to the square of the number of nodes in the network.” https://www.youtube.com/watch?v=GVkDdx_NIRM  digital business and e-commerce Online Ecosystems “Metcalfe’s Law” Network v linear businesses Linear businesses gained a competitive advantage by buying assets, controlling supply chains, and driving transactions.  digital business and e-commerce Online Ecosystems “Metcalfe’s Law” Network v linear businesses Digital companies gain competitive advantages through building network effects, relationships and interactions https://www.youtube.com/watch?v=oB_NM_kL6rM&t=3s  digital business and e-commerce Online Ecosystems “Metcalfe’s Law” - Network effects the Internet has become a facilitator for network effects & As it becomes less expensive to connect users on platforms, those able to attract them in mass become extremely valuable over time.  digital business and e-commerce Online Ecosystems “Metcalfe’s Law” - Network effects network effects facilitate scale as digital businesses and platforms scale, they gain a competitive advantage, as they control more of a market.  digital business and e-commerce Online Ecosystems “Metcalfe’s Law” - Network effects Third, network effects create a competitive advantage. https://www.youtube.com/watch?v=BhRZ8-IzgZc&t=11s  digital business and e-commerce Online Ecosystems “Gilder’s Law” - "bandwidth grows at least three times faster than computer power."  digital business and e-commerce Online Ecosystems “Gilder’s Law” - To the extent that technology allows it, we are experiencing a sustained increase in communication capacity…  digital business and e-commerce Online Ecosystems “Gilder’s Law” - … & We have the possibility of interacting locally from a distance, thanks to the virtualization of face-to- face functions.  digital business and e-commerce Online Ecosystems “Gilder’s Law” - … if computer power doubles every eighteen months (per Moore's Law), then communications power doubles every six months.  digital business and e-commerce Online Ecosystems “Gilder’s Law” - The exponential growth of computing capacity (Moore's Law) …  digital business and e-commerce Online Ecosystems “Gilder’s Law” - … a