E-Commerce Notes #11

Business Strategies  are set of plans for achieving superior long term returns on capital invested in a firm. It includes strategies for making profit in the competitive environment in the long run. This profit represents economic value (Economic Value is created when a customer is willing to pay for a product with a price which is more than the cost of the product)

Four strategies that are commonly used are based on :

• Differentiate strategy - Refers to the different ways through which a producer can make the product unique & different to distinguish them from competitors. Opposite to differentiation is commoditization - when there's no difference in products and services and the only basis of choosing a product is price. In such a situation when the price alone is a parameter for competition. There are many sellers and buyers in the market and there is a great fall in the price of the product eventually the price of the good falls to the cost to produce it.
• Cost strategy - Most of the businesses compete on cost so it very important to develop a cost strategy for e-commerce it is important that the firm uses internet ubiquity by lowering the ordering cost. Leveraging global reach and universal standards through single order entry system. (E.g. - Tata Nano)

• Scope strategy - Strategy to compete in all markets around the globe rather than local, regional or national markets.

• Focus strategy - Strategy to compete within a narrow market segment or a product segment. This is a specialization strategy with a goal of becoming premier provider in a narrow market. (e.g. - Amazon - for books)

PART 2 :: THE INTERNET : TECHNOLOGY BACKGROUND

Internet - Interconnected networks

• Innovation (1961-74) - Developing the basic idea and technology  conceptualization of fundamental building blocks, e.g. - hardware, software, client-server computing

• Institutionalization (1975-1995) - Ideas brought forth communication.
• Commercialization (1995 - present) - The govt. agencies encouraged private, corporates to take over expansion of backbone of internet and availability to common man. 

FNC - Federal Network Council

According to FNC, logically linked computers having unique IP address, supports TCP/IP, provides high - level service publicly or privately, will form internet.

Internet works on Packet Switching - Data/Information Is divided into packets ( To Bits, Header is attached which contains the info. regarding destination address, source address, etc., Sequence | At the destination the first thing is re-ordering of packets )

TCP/IP - Is a protocol/rule used to establish connection.