Strategic Development of Business Models Implications of the

Strategic Development of Business Models Implications of the Web 2. 0 for creating Value on Internet M. Sc. Irma Bejarano-González 18. 06. 2012

Agenda • What is web 2. 0? • The 4 C Internet business model typology • Which are the key factors and sub factors of the Web 2. 0 phenomenon? • Which are the most important factors and sub-factors? • Which activities can the existing Internet businesses implement to embrace the Web 2. 0? • Which is the degree of importance of the different factor for each of the different business models “ 4 C”? • Conclusion

What is the Web 2. 0? • The bursting of the dot-com bubble (Web 2. 1) in the fall of 2001 • People thought “the web was overhyped” • Web 2. 0 concept born in 2005 by Dale Dougherty of O’Reilly Media • 2 nd generation of the Word Wide Web (Web 2. 0): Evolution of the static HTML Web pages dynamic Web. • improving the ability for people to collaborate and share information online. • Changed the business models of the internet based companies and the way they create value.

What is a Business Model ? • “the story that explains how an enterprise works, ” Management writer Joan Magretta • "The answer to the questions: 1) Who is your customer? , 2) What does the customer value? , 3) How do you deliver value at an appropriate cost? ” , Peter Drucker

The 4 C Internet business model typology

Which are the key factors and sub factors of the Web 2. 0 phenomenon?

• • 1. Social Networking: Structures of human on-line interactions Built in a certain topic aiming to connect friends, or assessments of products and services • 2. Interaction Orientation: Firm’s ability to manage effectively the rising customer demand for a more intense and authentic dialogue between firm and customer 2. 2 Customer Response 2. 1 Customer Centricity Users seeking for a sense of belonging 1. 2 Social Trust Product reviews and customer opinion platforms Puts customers central stage and views them as focal point of the business Firms’ ability to manage the dialog with tis customers and develop capabilities to react 1. 3 Virtual word of mouth 1. 4 Increasing Consumer Power 2. 3 Interaction Configuration 2. 3 Cooperative value generation 1. 1 Social Identity Informal information transfer between different parties • Increase of Firms’ awareness of user opinions 3. Customization and Personalization Web 2. 0 Firm’s ability to gives customers what they want, identify users implicit interest and learn what they like 3. 1 Personal Customization Reconfiguring websites according to their needs 3. 3 Group Customization Whole groups to build and enforce new configurations 3. 2 Social Customization Internet business offering specifically customized products to distinct social layers Information is exchange, and with whom and for what reason Company integrates customers into business transactions as equals 3. User-Added Value: Firms' ability to recognize that there is not only costumers value added, the value comes also from the internet users 3. 4 User-generated content 3. 2 User-generated creativity Creation of profiles, whole websites and media such as video and audio files let customers bring creative ideas in the development of products 3. 3 User-generated Innovation 3. 4 Sources of revenue Huge amount of innovation generated in the “open software space" Enable companies to optimize and broaden their products range and attract new users.

Which are the most important factors and sub-factors? 1 st 1 Social Networking 1 st Virtual word of mouth 2 nd Social identity 3 rd Social trust 4 th Customer Power 2 nd 2 Interaction Orientation 3 rd 1 st Customer centricity 3 User-added value 2 nd Customer response 1 st User-generated creativity 4 th 4 Customization/ Personalization 3 rd 2 nd Usergenerated revenue/contact 4 th 3 rd Usergenerated content 2 nd Group customization 4 th User-generated innovation 3 rd Social customization Interaction configuration Cooperative value generation 1 st Personal customization

Which activities can the existing Internet businesses implement to embrace the Web 2. 0?

Which is the degree of importance of the different factor for each of the different business models “ 4 C”?

Conclusion