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E-Business’ Value Proposition



The value proposition describes the value that the company will provide to its customers and, sometimes, to others as well. With a value proposition, the company attempts to offer better value than competitors so that the buyer will benefit most with this product.

A value proposition may include one or more of the following points:
– Reduced price.
– Improved service or convenience such as the “1 click” checkout.
– Speed of delivery and assistance.
– Products that lead to increased efficiency and productivity.
– Access to a large and available inventory that presents options for the buyer.

Providing value in an e-business uses the same approach as providing value in any business, although it may require different capabilities. But common to both are the customers who seek out value in a business transaction. The value proposition helps focus the business on the well-being of the customer, where it remains in successful companies.


STRUCTURAL CONCEPTS TO DELIVER VALUE

The effective delivery of value to a customer requires that a company organize its structure and functions according to the type of product or offering delivered. The value chain, as popularized by Michael Porter, describes a linear set of steps, which could be activities or business processes such as design, production and sales, whereby a manufacturing company delivers value. This value chain delivery model strives for overall efficiency and cost reduction by increasing the efficiency and reducing the cost of each business process. Each step is independent and separable, and can be outsourced, or contracted out to another company. The value chain becomes a supply chain when a company uses the inputs and activities of other companies in its manufacturing process.

The value shop describes a service operation, such as a consulting, law or accounting firm that focuses on customer needs rather than on the production process of the value chain. It may also describe a department, such as customer service, within a larger organization. For example a manufacturing company could have within it a department that operates as a value shop.

The e-business set up as a value shop works directly with the customer to provide a necessary, often unique, solution. The value shop is geared to solve specific client problems rather than to make a common solution more efficient. Some value shops, such as large consulting companies, will attempt to duplicate solutions among clients by introducing jargon to describe steps in an approach, and by attempting to fit the client’s problem to the approach, rather than focusing on the client’s problem.

The value network is a type of e-business where networked users negotiate a transaction on a website. The value network hosts online auctions, brokering, market making, intermediation, or other types of transactions.

The value network depends on growth in order to attract more users. When the number of users on a value network increases, the network becomes more valuable to each participant since it increasingly becomes the site where desirable transactions will take place. Ultimately the strategy of network dominance results in large companies like eBay, since in theory it drives all of the users to be on one network. However, for various reasons this limit is never reached, and competitors do emerge, even for a company like eBay.