Cyber Entrepreneurship

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Access to markets and resources, Albert A. Angehrn

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Information space: In terms of engaging with the environment, the VIS is the virtual space which has attracted the most attention - primarily because it affords instant global access, whether to potential customers or business partners. For many companies, the Internet represents little more than a parallel way of diffusing standard information - and their Web sites mirror the content, not to say the appeal, of their corporate literature. Establishing a rapid Internet presence was essentially a PR consideration.

Simply creating a Web site does little to stimulate interest. It establishes contact - but if if the aim is to connect with other economic agents then the information provided has to be pertinent. Relevance can be enhanced by customising the channel, so that the pages are tailored to user groups. For example, potential business partners may have very different company or product information needs from potential consumers.

But this is not a one-off effort. If the company wants people to return to the site, and to build up an on-going relationship, then it needs regularly to update the content of its pages. And that requires dedicated personnel, and investments in multimedia competencies.

Moreover, there is a lot of information to extract from monitoring the flow of visits to the site. Companies which take the trouble to compile and analyse this information may find it a cheap way of understanding customer preferences.

Communication space: The VCS presence of most companies remains underdeveloped because businesses are still not sure what objectives it might serve. Part of the problem, is that the interface with customers has traditionally been the responsibility of the marketing department - which is more used to broadcasting to than interacting with customers.

The VCS provides an opportunity for economic agents to exchange information and opinions through e-mail, in on-line forum discussions, or more advanced 3D- and virtual reality interaction spaces. Discussions among visitors regarding their experiences with the product and ideas relating to its usage may have an unforeseen payoff for the company. Besides helping to differentiate the product, it may also yield unexpected insights on possible product adaptations or highlight untapped market segments.

There is also a case for opening similar sites for corporate users - potential partners, suppliers, or distributors from within the same industry - who might interact in closed user groups, discuss industry trends via on-line forums, and formulate requests for meetings with company representatives. These social spaces would build up relationships and potential sources of information which might pave the way for future commercial collaboration - like virtual trade fairs. Of course, monitoring and contributing to such communication spaces may require the creation of new jobs.

Over time one can expect that this monitoring role will develop into a more proactive role aimed at opinion building or lobbying. With a high level of interaction outside its control, companies may need to find ways of influencing that opinion, not least to preempt unfounded rumours.

Distribution space: Exploiting the VDS potential of the Internet is primarily aimed at cutting costs and lead times. Of course, software and publishing companies have been particularly quick to latch on to the possibilities of dispensing with intermediaries and delivering their products directly. But the Internet can also be used to distribute to customers auxiliary services associated with "physical" products such as cars. Instruction manuals, customer support and consulting services, product-related training and updates - including digital pictures and music - can all be provided over the Web in ways that "augment" the value of the "core" product.

What is more, the Internet creates the possibility of offering new value adding services. Some companies have found that they can repackage the information they use to control their own processes and make this information available to customers as a service. A typical example is the magazine or newspaper which gives outside access to its archives - an activity which was initially designed to support the in-house work of its own journalists. Another example is the Federal Express service which allows customers to track their parcels on-line. This reduces the number of expensive calls to customer service representatives and has increased customer loyalty in a fiercely competitive market. More and more companies are pushing back the interface with the customer - putting back-office processes on display, rather in the way that restaurants sometimes let you see the chefs in action as part of the "eating experience".

Transaction space: the objective here is clear: to engage in business-to-business or business-to-customer transactions such as ordering, invoicing and payment. This has both revenue generation and cost reduction potential in that "disintermediation" facilitates order processing and shortens lead times. The cost of an Internet transaction, in banking for example, is a fraction of the same transaction at a bank branch.

Business-to-business transactions have benefited considerably from this channel. It allows companies to trigger automatic ordering, to invoice and make payments easily. This has been facilitated by EDI platforms which provide a high level of security to the transactions. In fact, many businesses are insisting that potential suppliers install EDI if they want to be considered.

Business-to-consumer transactions do not yet benefit from the same kind of security or reliability as offered by the EDI system. Currently, the huge potential for wide-reaching commercial activity with consumers is stifled by legal, security and reliability concerns.

The commercial activity so far has typically been limited to low value purchases like software, books, music, and magazines. One such example is Virtual Vineyards a Web-based service that sells wine, mostly from small vineyards. Visitors can purchase directly from the company using an on-line form. A more secure system is proposed by IBM which enables visitors to browse through a catalogue of products via the Web and then place orders interactively via a Secure Credit Card Information Form. With many companies looking into ways of improving security, it is only a matter of time before on-line transactions explode.

Once security can be guaranteed, a company will simply need to hook up its Internet site with its internal accounting system or other transaction processing systems. This is an advanced type of application which will demand heavy investments.



Copyright Professor Albert Angehrn, Insead

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