Topic 5: Business Models.

1-Describe the features of each of these business models giving an example of each.

·      Brokerage:

A brokerage is a financial institution that facilitates the buying and selling of financial securities between a buyer and a seller.

Features

Ø  Brokerage firms trade public stocks and other securities, usually through the firm's agent stockbrokers.

Ø  The staff brokerage researches the markets to provide appropriate recommendations and direct the actions of pension fund managers and portfolio managers.

Ø  These firms also offer margin loans for certain approved clients to purchase investments on credit, subject to agreed terms and conditions.

Ø  Traditional brokerage firms have also become a source of up-to-date stock prices and quotes.

Examples:

Different Brokerage models vise examples are given below as outlined by Michal Rappa in his digital enterprise resources.

                             

Model                                                         Examples

·         Marketplace Exchange                      Orbitz, ChemConnect

·         Buy/Sell Fulfillment                          CarsDirect, Respond.com

·         Demand Collection System               Priceline.com

·         Auction Broker --                             eBay

·         Transaction Broke                            PayPal, Escrow.com

·         Virtual Marketplace                        zShops and Merchant Services at Amazon.com

·      Advertising:

Features

Advertising is a form of marketing communication used to encourage, persuade, or manipulate an audience (viewers, readers or listeners; sometimes a specific group) to take or continue to take some action. Sites that rely on advertising, sell advertisements against their traffic. In basic terms: the more traffic you have, the more you can charge for ads. A web site, provides content (usually, but not necessarily, for free) and services (like email, IM, blogs) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster.

Examples:

Examples of advertisement business model include paid placements done by sites like Google, Yahoo etc. Other examples includes placement of search links within various kinds of websites, portals ,classifieds, user registrations, intromercials and ultramercials

·      Infomediary:

The term infomediary is a contraction of "information intermediary. An infomediary works as a personal agent on behalf of consumers to help them take control over information gathered about them for use by marketers and advertisers.

Features

Ø  The most important characteristic of the infomediary model is the capture and sharing of information

Ø  Infomediaries operate on the assumption that personal information is the property of the individual described, not necessarily the property of the one who gathers it.

Ø  Infomediary seeks to act as a trusted agent, providing the opportunity and means for clients to monetize and profit from their own information profiles

Examples:

One of the first focused implementations of the infomediary concept was an online advertising company called AllAdvantage launched in 1999. While that company did not survive, in more recent years there has been renewed interest in the infomediary concept, with entrepreneurs and investors building companies to identify and leverage the market value of consumers' information.
Michal Rappa determined examples of Infomediaries which are as given below,

Advertising Networks                                    example DoubleClick

Audience Measurement Services                   example   Nielsen//Netratings

Incentive Marketing                                       example Coolsavings

Metamediary                                                   example Edmunds

·      Merchant:

The Merchant business model is used by retailers and wholesalers. In simple words merchants buy goods, and sell them with profit.in web based business models this model will include merchants selling digital products like iTunes. Types of merchant model along with their examples as outlined by Michal Rappa are as stated below,

Model	Description	Example
Virtual Merchant	Retail merchant that operates solely over the web	Amazon.com
Catalog Merchant	Mail-order business with a web-based catalog	Lands' End
Click and Mortar	Traditional brick-and-mortar retail establishment with web storefront	Barnes & Noble
Bit Vendor	Deals strictly in digital products and services and, in its purest form	Apple iTunes Music Store

·      Manufacturer (Direct):

Features

Manufacturer direct model operates on the bases that by eliminating third party intermediaries like distributors and wholesalers, consumers are supposed to benefit with lower prices and increased satisfaction of the consumers in dealing directly with manufacturers. This model characterizes efficiency, improved customer service, and a better understanding of customer preferences.

Examples:

Dell Computer is the example other examples include Example is flowerbud.com the company which sold flowers directly online.

·      Affiliate:

Affiliate is Electronic commerce business model that enables a firm to generate revenue streams on hundreds (even thousands) of items without carrying inventories, managing orders, processing payments, or handling packaging and shipping. In this arrangement, a website concentrates on a relationship with a very specific group of individuals as its core. It develops and continuously upgrades content and services to attract and retain the patronage of this group. Once it has a sizable number of regular visitors, it can generate revenue by carrying ads or links to merchants with products that its visitors seek or are interested in.

http://www.businessdictionary.com/definition/affiliate-model.html#ixzz2yZLUsnlJ

Examples:

Many software vendors operate affiliate marketing schemes, eg. online backup vendors Mozy and Carbonite. Amazon also operates an extensive affiliate program, allowing website owners to earn commission for referrals on books and other products.

There are a number of affiliate portals, such as Clickbank, Commission Junction and Kolimbo which exist to create links between vendors and potential affiliates.

http://www.sqa.org.uk/e-learning/ECIntro01CD/page_14.html

·      Community:

Features

In community model an online presence is developed and several individuals or groups are encouraged to join and participate in ongoing interaction designed around a common purpose. This model is based on consumer loyalty revenue is generated by selling ancillary products and services or voluntary contributions.

Examples:

Public broadcasting (Google, Wikipedia) and social networking services (Facebook, Flicker) are the examples of community model.

·      Subscription:

Features:

This is the model in which users are charged a periodic, daily, monthly or annual, fee to subscribe to a service. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined.

Examples:

Examples include different magazines and newspapers subscribing to send periodic newsletters etc. American online, class mates etc.

·      Utility.

Features:

The utility model is a "pay-as-you-go" service provider that charges based upon metered usage. It takes its name from the utility services, such as water and electricity, which have traditionally used this metered charge style. In some countries, ISPs are still billed as a metered service, with rates varying as usage increases or decreases. In a slight variation, some Internet businesses, among them Slashdot, operate as subscription utilities. In this utility variation, subscribers are charged a fee based upon number of website content pages viewed.

Examples:

Internet service providers are the example of utility model. Other examples include metered subscription like charges per page view.

2-Study Global Technology report and answer the following:

1) What is the Mobile phone use /100 population - compare Australia, USA, China, India, Your Country

     
Comparison is as shown below,

Country	Mobile Phone use/100 Population,	Rank/142
Australia	108.3/100	67
USA	92.7/100	95
China	73.2/100	115
India	72/100	117

2) Internet use / 100 population- compare Australia, USA, China, India, Your Country

Country	Internet use,%	Rank/142
Australia	79	18
USA	77.9	20
China	38.3	74
India	10.1	119

http://www3.weforum.org/docs/WEF_GITR_Report_2013.pdf

3) Compare main strengths and weaknesses of Australia or your home country in the survey

Strengths of Australia:

·         Australia has effective law making bodies it ranks 18 among 144 nations and score of its effectiveness of law making bodies is 4.9 which is above median.

·         Australia has good business and innovation environment to support ICT as it ranks 19 in availability of latest technologies quality of management schools is also good.

·         Australia has secure internet servers

·         Australia ranks well among 144 nations in 5^th pillar of skills it ranks 1^st in secondary education gross enrollment rate.

·         Australia has availability of knowledge intensive jobs(rank 12 /144)

·         Australia’s Government services are also available online.(rank 9/144)

·         E-participation index

·         99% adult literacy rate

Weaknesses of Australia:

·         Affordability, 4th pillar, high tariffs

·         High software piracy rate

http://www3.weforum.org/docs/WEF_GITR_Report_2013.pdf

4) What does the survey suggest to you about the Information Technology readiness of Australian business compared to Australian consumers?

Australia is well developed country according to Networked readiness index detail firm level technology absorption rate is of near best level business to business and business to consumer internet usage index is also well staff is also trained well as its index is 4.6 which is also above median. On the other hand individuals are also free to use internet personal computers and households also have access of internet. Individuals also use virtual social network frequently.

http://www3.weforum.org/docs/WEF_GITR_Report_2013.pdf

Topic 4: Digital Design

1-In two paragraphs explain why a customer centric Web site design is so important, yet so difficult to accomplish

This means that the website must be designed to meet the needs of a target audience. Customer-centric website designer needs to understand not only what the customer values, but also the value the customer represents to their bottom line. They align their operating models behind a carefully defined and quantified customer segmentation strategy and tailor business streams–product development, demand generation, production and scheduling, supply chain, customer care, etc.–to delivering the greatest value to the best customers.

The challenge is how to manage a customer centric website design complexity that comes with trying to implement a truly customer centric strategy. Many designers are not keeping pace with changing consumer dynamics and are far behind in meeting customer expectations. To succeed in this fast changing environment and achieve sustainable top-line growth, designers need to focus on redefining customer relationships, transforming business models to embrace data and digital and introducing an innovative culture in support of strategic decision making. In addition the designers need to know the do and don’ts of their target segment.

2. Define the term ‘presence’. Write an additional paragraph that describes why firms that do business on the Web should be more concerned about presence than firms that operate in the physical world.

Web Presence is defined as being "the appearance of a person or organization on the World Wide Web." And "the amount of web presence can be measured in the amount of sites an organization or individual has, which can include their own website, social network profiles, and their site's search engine ranking, traffic, popularity, and backlinks. “Presence means the existence and way of expressing oneself.

I believe the firm that does business on web should be more concerned about presence because it is the only source of their presence in front of the whole world. Other firms operating in physical world can express their presence in many tangible ways for example through their employees, from their neat and clean offices etc. Web based firms should focus on the feedback strategy as this is the only important factor that can keep both the firm and the customers on one window.

3. Usable Doesn't Have To Mean Ugly ‘for a web design to be truly beautiful, it has to be functional, have purpose and contribute in some way to the website’s intuitiveness, usefulness and branding. All of these things contribute to the overall effect of a design’. This is a quote from one of the articles on web design linked on Web pages that suck. Find a web page that ‘does not suck’ and discuss the features that make it work

http://www.olx.com.au/

OLX is a web portal which is a sort of a single point for global village. It deals in selling, buying, trading, discussing, organizing and meeting people near and all over the world. Not only are their products are cheap but they also provide great range of options which suits your mood. This is a great way to attract the customer and demonstrates that they are looking out for their customers who may be struggling for money.

Topic 3 : Security and Privacy.

1-Find an example of a privacy breach that was reported in the Australian or international news in the last 6 months. What were the consequences? i.e. legal, political, financial, personal etc. What action was taken in response to the privacy breach?

·        Case Outline:

The Target Corporation is an American retailing company, founded in 1902 and headquartered in Minneapolis, Minnesota. It is the second-largest discount retailer in the United States, Wal-Mart being the largest.

On Dec 19, 2013 the Target company released the statement  confirming a data privacy breach, saying that 40 million credit and debit card accounts may have been impacted between Nov. 27 and Dec. 15, 2013.As per matter of fact

On Jan 10, 2014 Target said that the thieves who stole massive amounts of credit and debit card information during the holiday season also swept up names, addresses and phone numbers of 70 million customers, information that could put victims at greater risk for identity theft.

As per matter of fact the breach at Target Corp. that exposed credit card and personal data on more than 110 million consumers appears to have begun with a malware-laced email phishing attack sent to employees at an HVAC firm that did business with the nationwide retailer, according to sources close to the investigation.

KrebsOnSecurity reported that investigators believe the source of the Target intrusion traces back to network credentials that Target had issued to Fazio Mechanical, a heating, air conditioning and refrigeration firm in Sharpsburg, Pa.  Multiple sources close to the investigation now tell this reporter that those credentials were stolen in an email malware attack at Fazio that began at least two months before thieves started stealing card data from thousands of Target cash registers.

According to business week article issued on 13th March 2014,the fact was ,

In the days prior to Thanksgiving 2013, someone installed malware in Target’s (TGT) security and payments system designed to steal every credit card used at the company’s 1,797 U.S. stores. At the critical moment—when the Christmas gifts had been scanned and bagged and the cashier asked for a swipe—the malware would step in, capture the shopper’s credit card number, and store it on a Target server commandeered by the hackers.

·        Consequences:

1.       As a consequence the Target Company had to face legal charge. More than 90 lawsuits have been filed against Target by customers and banks for negligence and compensatory damages that’s on top of other costs, which analysts estimate could run into the billions.

2.       Target’s profit for the holiday shopping period fell 46 percent from the same quarter the year before; the number of transactions suffered its biggest decline since the retailer began reporting the statistic in 2008.

3.       Target company’ share prices started to fall considerably

4.       In Cowen & Co.’s Consumer Tracking Survey, conducted quarterly and for the first time since Target’s security breach news in mid-December, it found “meaningful decreases” in year-over-year customer satisfaction with both the total shopping experience and customer service in March. Satisfaction with the overall shopping experience at Target was down almost 2 percentage points in March, with declines “most acute” among middle-and-upper-income shoppers, analyst Faye Landes said, adding the higher-income shoppers are “key cohorts for Target”

·        Actions taken in response Privacy breach

As soon as the incident was made known to target they made it publicly announced. Further Target Chairman, President, and Chief Executive Officer Gregg Steinhafel issued an e-mailed statement in which he told actions taken in detail; he said “Target was certified as meeting the standard for the payment card industry (PCI) in September 2013. Nonetheless, we suffered a data breach. As a result, we are conducting an end-to-end review of our people, processes and technology to understand our opportunities to improve data security and are committed to learning from this experience. While we are still in the midst of an ongoing investigation, we have already taken significant steps, including beginning the overhaul of our information security structure and the acceleration of our transition to chip-enabled cards. However, as the investigation is not complete, we don’t believe it’s constructive to engage in speculation without the benefit of the final analysis.”

Target spokeswoman Sarah VanNevel said the company is “taking extra steps” to win back shoppers

2-Case Study: ‘Dark Scenario’ based on the fictitious Data Mining Corporation (DMC)

Ø  What AMI technologies are identified in the case?

Ambient Intelligence has been defined as the field to study and create embodiments for smart environments that not only react to human events through sensing, interpretation and service provision, but also learn and adapt their operation and services to the users over time. These relates to the technologies that are sensitive and responsive to the presence of humans. For example, sensors that switches on lights when a human enters a room.in the case of Data Mining Corporation a lot of ambient technologies are identified which are listed below,

ü  Location implants

ü  Sensor networks in home and in cars

ü  Surveillance system

ü  High capacity optical storage devices

ü  Backup devices

ü  Mobile phones

ü  Security system

Ø  What drives DMC’s officers to take the actions they took?

DMC’s officers decided and got instructions from their management to hide information of data theft from police and from their clients. Although this action was not ethical but it would have been very damaging for the company. Major fears which drove them to take this action involved,

ü  Fear of losing trust of the clients and giving them image that profiles of company’s own employees is not reliable

ü  Fear of bad publicity

ü  Fear of decline in share prices

ü  Fear of damage to plans of TSE listing

ü  If clients of the company would have come to know that their data is not secure then they would have withdrawn their business and DMC and it would have caused disastrous for the company.

Ø  DMC is the clear market leader in the aggregation of AMI data. Are there any comparisons you can make to technology companies today?

Yahoo and Google are not specifically  engaged in aggregation of AMI data but they have vast amount of data on its users profiles, it can use this data in tracing the trends and behaviour of its users in sending them relevant utilities information which can best help their users to cater their needs according to their likes and moods. For example Google can track the information about its users from its different utilities it provides like

·         Google Plus ,

·         Google Talk,

·         Google Map ,

·         Search pattern on Google Search

·         Google News , type of articles selected,

, and can then target tem to send advertisements of games or shopping or their new features as per the taste of the consumer. The same fact that Google hold enormous amount of data about their users was also explained by the Marrisa Mayer in her interview we read in doing last topic’s blogs.

Ø  How realistic is the description of governments using the technology and prohibiting immigration from states with no AMI data aggregation information?

In my view,  in a way Government use of technology and prohibiting immigration from states with no AMI data aggregation information system is realistic as the AMI data profile of the people coming into states helps Government find out that the people coming to STATES are not threat to the security of the country. Government need to know the plans of the people what they intend to do in states what is their background, what are their aims, and most importantly if they are threat in any way to the country.

On the other hand this may also be regarded as the discrimination as prohibiting someone from entering states only on the reason that their data history is not available on AMI data network seems illogical and it  hampers self-esteem of the individuals.

Ø  What would be the impact of this digital divide?

A digital divide is an economic inequality between groups, broadly construed, in terms of access to, use of, or knowledge of information and communication technologies (ICT). The divide within countries, (such as the digital divide in the United States) may refer to inequalities between individuals, households, businesses, and geographic areas at different socioeconomic and other demographic levels, while the divide between countries is referred to as the global digital divide, which designates nations as the units of analysis and examines the gap between developing and developed countries on an international scale.

 This digital divide causes a significant problem in many struggling parts of the world.  The parts of the world that have a predominant amount of internet access is the western world, the United States, Europe and Northern Asia, where as access is more restricted in the poorer less developed parts of the world such as Africa, India and southern parts of Asia.  These poorer nations are unable to afford the initial startup cost to be able to invest into technology to allow their nation to be able to have and maintain internet access.   This puts these countries at a competitive and economic disadvantage.  This is due to the fact that it impacts on society at many levels.  By a country not having internet access, it means that schools are unable to teach IT skills and take advantage of the vast amount of information available on the web.    With a lack of IT skills people from these countries are unable to compete at an international level.

In contrast the richer countries benefit from more highly trained people who will in turn enable higher economic growth.   In urban areas more people seem to have internet access as opposed to rural areas causing yet another divide.   Also countries that don’t have internet access are unable to carry out e-commerce and e-business putting their companies at a significant disadvantage with in the global market.

Ø  List some of the ‘unintended consequences’ described in the case.

Some of the unintended consequences involved, identity theft cases, people’s credit cards showed unauthorized uses as their bills showed the things they haven’t bought, a lot of companies and people got blackmailed with threats of releasing information. Consequently DMC had to face the legal charges due to negligence in securing the data and hiding the fact of data theft, their share prices started to fall and their clients lost confidence in them.

REFERENCES:

• http://krebsonsecurity.com/tag/target-data-breach/
• http://www.washingtonpost.com/business/economy/target-says-70-million-customers-were-hit-by-dec-data-breach-more-than-first-reported/2014/01/10/0ada1026-79fe-11e3-8963-b4b654bcc9b2_story.html
• http://www.businessweek.com/articles/2014-03-13/target-missed-alarms-in-epic-hack-of-credit-card-data#p1
• http://airlab.stanford.edu/
• http://www.ntia.doc.gov/ntiahome/fallingthru.html.
•  http://www.econ.yale.edu/growth_pdf/cdp881.pdf.
• http://www.dividedbytechnology.co.uk/impacts.html

Topic 2 : Navigating the Web

1) Listen to the podcast on Navigation which can be found on the Digital Enterprise Page (Google - the digital enterprise).

a) FOUR  MAIN POINTS MICHAEL RAPPA MAKES ABOUT SEARCH.

Michael Rappa started his speech with the issues in handling vast amount of data and problems associated with it he has highlighted that we are living in the world where data has overwhelmed us. Then Firstly, Michal Rappa has highlighted the fact that search has become very important for people to search for the information regarding different goods and services , search is most convenient and quick way for people to go to web and search for the things they want to find. it helps people to categories books on web and much more.

Secondly Michael Rappa gives his opinion that with the advancement of search and to provide the related search results to the searchers the fashion of interconnectedness of web emerged which helped the people to explore different webs relevant to their search results. This connected the different webs businesses, individuals to each other.

Thirdly search has become a big business on internet, like paid placements is a multibillion dollar business and Michael Rappa is of the opinion that it is expected to grow in future. With the popularity of using web for search thousands and millions of companies have emerged to automate the storm of database available and to algorithm the search results.

Fourthly emergence of paid placement in the context of search helped the people in adopting inexpensive and effective campaign of their valuables on the other hand helped search engines to give value to their core competency of search business.

He highlighted the history and process of progress of the most popular search engine most extensively being used now a day i.e. ‘Google’. He said that search is focal point for every major key player like Google yahoo, Microsoft etc.

b) Watch or read the Marissa Mayer interview. Write a paragraph or two, on four points made by Marissa Mayer, that you think were the most interesting or significant for business. There is no right or wrong answers here; I just want your opinion.
Answer:

Marissa Mayer was the vice president of search products and user experience at Google currently she is associated with Yahoo. Previously she helped decide which of Google engineers’ new ideas get presented to the company’s founders. Gmail, Google maps, Google news and many other applications all went through her. Charlie Rose interviewed her while she was associated with Google. Her interview was very interesting and informative; some important points of her interview are highlighted below,

·         Marrisa told about their future projects which involve voice search she said that’’ we’re going to have really good voice search, really good speech to text on YouTube videos so you’ll be able to search it, that will happen sooner than you’ll be able to say give Google an image and say find other images like this or find me images of a monkey, those types of things. I think that the voice breakthrough will probably happen in the next five years, maybe 10, and I think that — and then I think the vision will probably happen in more than a 10-year time frame, maybe 15. 

·         Another innovation which would be of enormous benefit and interest for businesses as well as individual users involve further advancement in Google latitude which is a prototype of the idea explained by the Marrisa in below paragraph,

Marissa Mayer: ‘’Well, there’s a lot of I think big ideas. One thing that we’ve been talking about for a while is really involving cell phones. If you take the cell phone technology, the GPS style technology we’ve worked on with wireless networks and cell phone towers and you combine that with a social network, you can find out where your friends are. In fact, we just released data of that product last week called Google Lattitude.It’s a very early prototype but it’s a really interesting idea. Can these cell phones we have with us help us connect better with our friends and find out where people are and what they’re doing? Well, I think that you know in terms of trying to understand you know someone, are they on their way to the meeting or not, are they you know, like are they in the coffee shop, you just happen to walk by, do they happen to be in the same airport you’re in? Those types of questions are really interesting. I think that’s an interesting application for a cell phone.’’

·         On a question on ‘reason of why yahoo lost its place’ Marissa highlighted important things for technology companies, she said ‘’ what drives technology companies is the people, right? Because in a technology company, it’s always about what are you going to do next. So then it comes down to, well, who is going to build that thing that you do next. So if you have the best people, that’s a huge benefit. And I do think that some of what happened with Yahoo! was a little bit of that lost focus, but I also think that over the events of recent years, they’ve lost a lot of their good people. There are still a lot of good people there, and we definitely are cheering for Yahoo because we really think that the web is better off.’’

·         Another interesting part of the interview was the reference of the article made by Marrisa which said ‘’your credit card company knows two years beforehand that you’re going to get divorced with 98 percent likelihood’’.On the question from Charlie that how is that possible Marrisa said it might be from the kind of purchases, stuff like that.Marrissa actually was defending the point that they are not alone to have enormous amount of data  about people about what they buy, their email, who their friends are rather ISP’s and even credit card company’s also hold so much personal information of users but she exclaimed that Google has very strict privacy policy. They try to be very up front with their users, what information we have and how we’ll use it

Part 2 - History of the Internet

2) Please watch the Bill Joy video, From the video - please answer

a) So what are the 6 webs?

Bill Joy, the inventor of Berkeley Unix, the founder of Sun Microsystems, and now a partner at Kleiner Perkins, that most blue-blooded of venture capital firms, has described a taxonomy for the Internet. He calls it "the six Webs.

Bill Joy's six Webs are:

1. The Near Web: This is the Internet that you see when you lean over a screen - like a laptop.

2. The Here Web. This is the Internet that is always with you because you access it through a device you always carry - like a cell phone.

3. The Far Web. This is the Internet you see when you sit back from a big screen - like a television or a kiosk.

4. The Weird Web. This is the Internet you access through your voice and which you listen to - say when you are in your car, or when you talk to an intelligent system on your phone, or when you ask your camera a question. Joy concedes that this Web does not yet fully exist.

5. B2B. This is an Internet which does not possess a consumer interface, where business machines talk to other business machines. It is chatter of corporations amongst themselves when they do not care about their human drones.

6. D2D. This is the Internet of sensors deployed in meshes networks, adjusting urban systems for maximum efficiency. This Web also does not yet exist. Joy says that it will embed machine intelligence in ordinary, daily life.

(http://www.technologyreview.com/view/404694/etc-bill-joys-six-webs/)

b) Could there be more?

There could definitely be more webs as there is no limit on research and explorations so yes  some more webs might  still  be explored but whose ideas are still to be developed , further as weird web idea presented by Joy he said in his video that this does not fully exist yet.

c) What does it mean for business?

Internet and digital technologies have become inevitable for success of any business. With the advancement of technologies ,their manifold advantages have enabled businesses to increase their business margins .the introduction of technologies like six webs introduced by bill joy helps businesses to yield benefits like,

ü  Attracting more and more customers by facilitating them in daily life

ü  Helps reduce costs of doing business

ü  Helps reduce time of doing business activities

ü  Helps businesses grow faster and do innovations

ü  Helps businesses to manage their supply chain. Etc.