A
A
RESEARCH REPORT
RESEARCH REPORT
ON
ON
Submitted in partial fulfillment for the requirement of
Submitted in partial fulfillment for the requirement of
the award of degree of
the award of degree of
Master of Business Administration
Master of Business Administration (
(2009-20011)2009-20011)
Under the guidance of Under the guidance of
Supervisor(s)
Supervisor(s)
Mr. Subhash Kumar
Mr. Subhash Kumar
(Faculty)
(Faculty)
Submitted by Submitted by Arish Sarfaraz Arish Sarfaraz Roll No. 0915070008 Roll No. 0915070008 M.B.A.(4M.B.A.(4ththSem.)Sem.)
CET-IILM-AHL GREATER NOIDA (U.P) CET-IILM-AHL GREATER NOIDA (U.P) (Affiliated to U.P.
C E R T I F I C A T
C E R T I F I C A T E
E
This is to certify that
This is to certify that Mr. ARISH SARFARAZMr. ARISH SARFARAZ has successfully completedhas successfully completed his research project on
his research project on “”“” withwith CET-IILM GREATER NOIDACET-IILM GREATER NOIDAandand submitted the project report on the same
submitted the project report on the same in a satisfactory manner under thein a satisfactory manner under the guidance of
guidance of MR. SUBHASH KUMAR.MR. SUBHASH KUMAR.
This project is an
This project is an authentic work done by the student in the authentic work done by the student in the fulfillment for thefulfillment for the award of the degree of
award of the degree of Master of Business AdministrationMaster of Business Administration of CET-IILMof CET-IILM Greater Noida.
Greater Noida.
Date :
Date : MR. SUBHASH KUMAR MR. SUBHASH KUMAR
Assistant Professor
Assistant Professor
CET-IILM CET-IILM Greater Noida Greater NoidaDECLARATION
DECLARATION
I hereby declare that the enclosed research project entitled
I hereby declare that the enclosed research project entitled “SCOPE OF E-“SCOPE OF E-MARKETING”
MARKETING”is an authentic work done by me and is based upon my ownis an authentic work done by me and is based upon my own efforts.
efforts.
The project was undertaken as a part of
The project was undertaken as a part of Master of Business AdministrationMaster of Business Administration
Program of
Program of CET-IILM Greater NoidaCET-IILM Greater Noida
(ARISH (ARISH SARFARAZ)
ACKNOWLEDGEMENT
I, “ Arish Sarfaraz ”, owe enormous intellectual debt towards my faculty guide Mr. Subhash Kumar , who has augmented my knowledge in the field of “E-Marketing” , helping me learn about the process and giving me valuable insight into the subject.
I am obliged to him for being extremely patient, giving me sufficient time for discussions and guidance at all stages through the course of this research. My increased spectrum of knowledge in this field is the result of his constant supervision and direction that has helped me to absorb relevant and high quality information.
I would like to thank him for his guidance and enriching my thoughts in this field from different perspectives.
Last but not the least, I feel indebted to all those persons and organizations which have provided information and helped me directly or indirectly in successful completion of this study.
TABLE OF CONTENTS
Acknowledgement 3
• Objective 5
Introduction 6
• Definition 7
Indian Overview of e-marketing 23
• Environmental Analysis of e-marketing 33
Literature Review 34
• Prior Research on Marketing with Internet 38 • The Arena of Marketing Research 40 • The Art of Database Building 42 • The essence of Customer Service 43
AnInsight 44
• Role of Internet in Marketing 45 • Fundamentals of effective marketing on the internet 50
Research Methodology 56
DateAnalysis 63
Data Results & Findings 71
Discussion 74
• Recent Trends in Indian Market 76 • Indian dot com Scenario 85
Summary &Conclusion 88
Annexure 91
• InternetGlossary 95
References 101
Objective:
• TO STUDY THE FEASIBILITY OF E-MARKETING FOR A WIDE
RANGE OF ACTIVITIES SUCH AS ADVERTISING, CUSTOMER SERVICES ETC.
• EXPLORING THE COST ASPECTS OF E-MARKETING ON THE
NET
• PAST AND FUTURE TRENDS OF E-COMMERCE & INTERNET
MARKETING AT A GLOBALISED LEVEL IN TERMS OF BUSINESS VOLUME, USAGE PATTERN AND CONSUMER INCLINATION TOWARDS USING E-COMMERCE.
DEFINITION
Electronic marketing is rapidly transforming the way hospitality and travel organizations conduct business. Electronic marketing is normally associated with Internet marketing. Internet marketing captures data which feeds into the firm’s database; the database is used to generate profiles and lists, which enable the firm to have effective direct marketing campaigns; and two of the media for direct marketing are the Internet using e-mails and CD-ROMs with hyperlinks to the Internet. Underlying electronic business are two phenomena: digitalization and connectivity. Digitalization consists of converting text, data, sounds, and image into a stream of bits that can be dispatched at incredible speeds from location to another. Connectivity involves building networks and expresses the fact that much of the World’s business is carried over networks connecting people and companies. These networks are called intranets when they connect people within a company; extranets when they connect a company with its suppliers and customers; and the Internet when they connect users to an amazingly large information superhighway.”
How Electronic Marketing will Change Marketing
Marketin
g Activity
Traditional
Marketing
Cyber Marketing
Advertising Prepare print, video, or voice copy and use standard media vehicles such as television, radio,
newspapers, and
magazines. Usually only very limited information can be presented.
Design extensive information and put it on the company’s Web page; CD brochures linked to your site; distribution of public relations information over the Internet.
Customer Service
Provide service five days a week, eight hours a day in the store or over the phone in response to customer calls:; provide on-site visits.
Provide seven-day, twenty-four-hours service response; send phone, fax, or e-mail solutions; allow customers to co produce their customer service; access to frequent guest diner and flyer information over the Internet.
prospects and customers
and demonstrating
product physically or by projective equipment.
prospect; showing the product on the computer screen; enabling customers to purchase their own hospitality and travel products.
Marketing research
Use of individual interviews, focus groups, and mailed or phones surveys.
Use of newsgroups of conversation and interviewing, e-mail questionnaires; access to focus groups over the Internet.
Selling
Hotel, cruise, and airline companies are using the Internet to distribute their products directly to the customer. On-line travel agencies as well as
discounters sell a variety of travel products through the Internet. One of the advantages of the Internet as a sales channel is that the customer does the work. The availability of technology to the typical customer has enhanced the opportunities for self-service. For example, a good Web site allows airline customers to choose their flight, select their seats, and make arrangements for special meals. A passenger that wants to explore all options and take twenty minutes to book a reservation can do this on the Internet; thus, the airline does not have the expense of an employee personally going through all the options with the passenger, making the Internet is an effective and efficient way of taking reservations. Internet technology can enhance customer satisfaction as it allows customers to access services when and where they want without the complications of interpersonal exchanges.
One important aspect of an Internet site is to enable customers to contact the company and talk with an employee. American Airlines has found that in addition to a telephone number, a Web chat option is useful for clients using their home phone line. If they have a question, they can contact, a representative without going off line. LowAirfare.com features working with a live agent on its site. Agents can assistant several on-line customers at on time. While one customer is reviewing his or her options, the agent works with someone else. By providing personalized service through text chat, Low Airfare is able to keep 92 percent of those who begin a transaction. This is a much higher average than most travel online agents.
the Web site for specials. They can distribute low fares over the Internet, the Web site for specials. They can distribute low fares over the Internet, rather than advertise them publicly and set off a potential price war with a rather than advertise them publicly and set off a potential price war with a competitor. Airlines give the option of listing flights from lowest price to competitor. Airlines give the option of listing flights from lowest price to highest price. Thus, price-sensitive travelers can choose the flights where the highest price. Thus, price-sensitive travelers can choose the flights where the airlines need customers. Cruise lines and hotel chains also list "specials," airlines need customers. Cruise lines and hotel chains also list "specials," hoping to attract price-sensitive customers to fill up
hoping to attract price-sensitive customers to fill up their ships and cruises.their ships and cruises. Restaurants use their sites to sell merchandise such as gift cards and to take Restaurants use their sites to sell merchandise such as gift cards and to take reservations. Dunkin' Donuts is known as much for its great coffee as it is for reservations. Dunkin' Donuts is known as much for its great coffee as it is for its donuts on the east coast of the United States. In the past Dunkin' Donuts its donuts on the east coast of the United States. In the past Dunkin' Donuts could only distribute their coffee through their stores. Now they have an could only distribute their coffee through their stores. Now they have an Internet site that allows them to sell their coffee to
Internet site that allows them to sell their coffee to cuscustomers who havetomers who have moved from the East Coast and find themselves without a Dunkin' Donuts moved from the East Coast and find themselves without a Dunkin' Donuts near them.
near them. Their site Their site features cofeatures coffee "subscriffee "subscriptions," ptions," allowing customers allowing customers toto receive two pounds of coffee delivered to
receive two pounds of coffee delivered to their door on a their door on a monthly basis.monthly basis.
Red Lobster sells both live lobsters and complete lobster bakes on its Web Red Lobster sells both live lobsters and complete lobster bakes on its Web site. Morton's Steak
site. Morton's Steak House makes House makes its its custocustom-crm-crafteafted d woodwood-han-handled dled steak steak kni
knives ves avaavailailableble. . EveEven n indindiviividuadual l resrestautauranrants ts and and smasmalleller r chachains ins can can selselll merchandise over the Internet. For example, Cheeseburger in Paradise on merchandise over the Internet. For example, Cheeseburger in Paradise on Maui sells clothing.
Maui sells clothing.
Communication
Communication
One of the important uses of the Internet is communication. It can provide One of the important uses of the Internet is communication. It can provide color views of the destinations and its related activities. The activities may be color views of the destinations and its related activities. The activities may be listed on a
listed on a menu; thus, someone wanting water sports, hiking, art menu; thus, someone wanting water sports, hiking, art museums, or museums, or hi
histstororicical al totoururs s cacan n clclicick k on on ththe e apapprpropopririatate e memenu nu ititem em anand d geget t ththee in
infoformrmatatioion n neneedededed. . InInfoformrmatatioion n is is prpresesenenteted d in in a a waway y ththat at wiwill ll mamakeke potential customers
potential customers want to want to come to come to the destination. the destination. A destination A destination marketingmarketing organization (DMO) must work to see that the official site is well situated in organization (DMO) must work to see that the official site is well situated in the main search engines, so that it conies up when someone searches for the main search engines, so that it conies up when someone searches for in
infoformrmatatioion n on on ththe e dedeststininatatioion. n. If If ththe e DMDMO O dodoes es nonot t do do a a gogood od jojob b atat managing its presence on search engines, a site not portraying the desired managing its presence on search engines, a site not portraying the desired image of the destination may be the top one in the search engine. The task of image of the destination may be the top one in the search engine. The task of managing the placement of a site near the top of the search engine lists is managing the placement of a site near the top of the search engine lists is becoming
becoming more more difficult difficult as as more more and and more more engines engines are are selling selling placements.placements. Thus, one must pay to be at the top. Marketing Highlight 16-1 looks at some Thus, one must pay to be at the top. Marketing Highlight 16-1 looks at some
of the issues of designing a Web site for a tourism destination, as well as of the issues of designing a Web site for a tourism destination, as well as managing the destination's Web
managing the destination's Web presence.presence. Web sites for hotels have
Web sites for hotels have the chance to communicate information to a number the chance to communicate information to a number of different segments. The home page, can provide information targeted to of different segments. The home page, can provide information targeted to reach a number of different audiences. For example, a food and beverage reach a number of different audiences. For example, a food and beverage director of a hotel can develop a special site for banquets and catering. In director of a hotel can develop a special site for banquets and catering. In addition to being linked to the home page, these specialized sites can be addition to being linked to the home page, these specialized sites can be submitted to search engines. Thus, someone looking for a place to hold a submitted to search engines. Thus, someone looking for a place to hold a banquet
banquet can can come come to to the the hotel's hotel's banquet banquet site site directly. directly. Remember Remember that that all all aa company's potential markets may not think of them as a provider of the company's potential markets may not think of them as a provider of the service they desire. It is up to the company to communicate directly with the service they desire. It is up to the company to communicate directly with the markets they wish to serve. Focus groups are a good way to evaluate the markets they wish to serve. Focus groups are a good way to evaluate the content and accessibility of sites designed for different clientele. Someone content and accessibility of sites designed for different clientele. Someone using an Internet site should be able to access the page with the information using an Internet site should be able to access the page with the information they need in three clicks or less.
they need in three clicks or less.
Hyatt hotels home page provides an example of a home page that is well Hyatt hotels home page provides an example of a home page that is well indexed. From the home page, the user
indexed. From the home page, the user can go to a can go to a specific type of Hyatt (i.e.,specific type of Hyatt (i.e., Park Hyatt), make a reservation, check on special offers, or order a gift Park Hyatt), make a reservation, check on special offers, or order a gift certificate. For professional users there is a Press Room, a section for Travel certificate. For professional users there is a Press Room, a section for Travel Pr
Profofesessisiononalals, s, anand d a a MeMeetetining g PlPlanannining ng InIndedex. x. EaEach ch sesectctioion n prprovovidideses information that will be relevant to the
information that will be relevant to the user.user.
Providing visual information on the Internet is certainly more cost-effective Providing visual information on the Internet is certainly more cost-effective than printing and mailing out brochures. Many hotels offer visual tours and than printing and mailing out brochures. Many hotels offer visual tours and some chains, such as Courtyard, offer visual tours of the different types of some chains, such as Courtyard, offer visual tours of the different types of hotels they have such as classic, downtown, and vacation hotels. Those hotels hotels they have such as classic, downtown, and vacation hotels. Those hotels with a focus on meetings may use one of the meeting software packages such with a focus on meetings may use one of the meeting software packages such as MeetingMatrix, Optimum Settings, or Room
as MeetingMatrix, Optimum Settings, or Room Viewer, allowing the meetingViewer, allowing the meeting planner
planner to to diagram diagram the the rooms rooms with with their their desired desired set-up set-up and and e-mail e-mail it it to to thethe hotel and facilitating communication between the meeting planner and the hotel and facilitating communication between the meeting planner and the convention service manager at the hotel.
convention service manager at the hotel.
The Internet allows companies to have a global reach. Someone from England The Internet allows companies to have a global reach. Someone from England traveling to Malaga, Spain, can find out about tourist attractions, places to traveling to Malaga, Spain, can find out about tourist attractions, places to stay, and places to dine. The English traveler does not have to know Spanish, stay, and places to dine. The English traveler does not have to know Spanish, as smart hospitality and travel companies will translate their information on as smart hospitality and travel companies will translate their information on their sites into the
their sites into the languages spoken by their target markets.languages spoken by their target markets. The
The IntInternernet et is is an an excexcellellent ent medmedium ium to to comcommunmunicaicate te whawhat t proproducducts ts areare off
offereered d and and the the benbenefiefits ts of of thothose se prproduoductscts. . HoHowevwever, er, ininforformatmation ion thathat t isis communicated should be accurate. Showing seven-year-old photos that were communicated should be accurate. Showing seven-year-old photos that were taken after a hotel's last renovation will not create trust with the buyer if they taken after a hotel's last renovation will not create trust with the buyer if they
meeting planners has revealed they do not trust information received over the meeting planners has revealed they do not trust information received over the Internet. They view it much the same way as they view information received Internet. They view it much the same way as they view information received in an advertisement. They know the seller created it, and they are skeptical. in an advertisement. They know the seller created it, and they are skeptical. However, once they find out through use of the product that the Internet is an However, once they find out through use of the product that the Internet is an accurate portrayal, then they view the Internet site as providing accurate accurate portrayal, then they view the Internet site as providing accurate information. When this happens they make greater use of the information and information. When this happens they make greater use of the information and ser
servicvices es the the sitsite e proprovidvides. es. The The IntInternernet et alsalso o proprovidvides es the the oppopportortuniunity ty for for inte
interactiractive ve commcommunicaunication tion betwbetween een the the custocustomer mer and and the the businbusiness. ess. BasiBasicc principles of elec
principles of electronic markettronic marketing are explained iing are explained in Table 16-2.n Table 16-2.
Three Basic Principles of Electronic Marketing
Three Basic Principles of Electronic Marketing
1.
1. Build Build and and actively actively manage manage a a customer customer database.database. In this era of scarceIn this era of scarce customers, companies need to capture the names of and as much useful customers, companies need to capture the names of and as much useful in
infoformrmatatioion n as as popossssibible le ababouout t popotetentntiaialllly y vavaluluabable le prprosospepectcts s anandd customers. A rich customer database can provide the company with a customers. A rich customer database can provide the company with a strong competitive advantage. The company can search and rate different strong competitive advantage. The company can search and rate different groups and individuals for their probability of responding to a given offer groups and individuals for their probability of responding to a given offer or highly tailored offers. A database permits a company's targeting to be or highly tailored offers. A database permits a company's targeting to be super efficient.
super efficient. 2.
2. Develop a clear con Develop a clear concept on how the comcept on how the company should take adpany should take advantage of thevantage of the Internet.
Internet. A company can develop a presence on the Internet in at leastA company can develop a presence on the Internet in at least seven ways. The company can use the Internet to do research, provide seven ways. The company can use the Internet to do research, provide info
informatrmation, ion, run run discudiscussion ssion foruforums, ms, provprovide ide traitraining, carry ning, carry on on on-lion-linene buying
buying and and selling selling (i.e., (i.e., e-commerce), e-commerce), provide provide on-line on-line auctioning auctioning or or exchanging, and even deliver "bits" to
exchanging, and even deliver "bits" to customers.customers.
The company's Web page must be appealing, relevant, and current if it is The company's Web page must be appealing, relevant, and current if it is to attract repeat visits. Companies should consider using state-of-the-art to attract repeat visits. Companies should consider using state-of-the-art graphics, sound, and video. They should add weekly news or features graphics, sound, and video. They should add weekly news or features ("coming next week: Chef Lambert's summer barbecue recipes"). The site ("coming next week: Chef Lambert's summer barbecue recipes"). The site can be developed to provide valuable help, such as links to a map showing can be developed to provide valuable help, such as links to a map showing the location of the hotel or restaurant. Virtual Vineyard provides product the location of the hotel or restaurant. Virtual Vineyard provides product expertise and a personal connoisseur to recommend choice wines, Holiday expertise and a personal connoisseur to recommend choice wines, Holiday Inn books rooms over the Internet, and Chili's tells where its restaurants Inn books rooms over the Internet, and Chili's tells where its restaurants are located.
are located.
The company must view its Web page critically and ask
The company must view its Web page critically and ask a number of ques-a number of ques-tions: Why would someone want to surf to our site? If I view the site
tions: Why would someone want to surf to our site? If I view the site usingusing th
the e eqequiuipmpmenent t my my cucuststomomerers s ususe, e, dodoes es ththe e sisite te loload ad ququicicklkly y or or is is aa customer likely to leave while they are waiting for graphics to load? What customer likely to leave while they are waiting for graphics to load? What
is interesting about our page? Why would someone want to return to our page? Why would someone want to advertise on our page?
3. Be easily accessible and quick in responding to customer calls. Customers have high and rising expectations about how quickly and adequately they should receive answers to questions and complaints sent in by phone or e-mail. Make sure the Internet user can communicate directly with the company on-line. People like to be able to communicate with other people. One advantage of the Internet is that we can communicate automatically. The computer can be programmed to book reservations, select and confirm seat assignments on airlines, and send confirmations of reservations, changes in flight plans and other information to the customer or per sportive customer. However, when the user has a question that the computer can not answer or they have a problem they would like to discuss, they should be given a phone number to call and an automatic e-mail option. Too many sites have the goal of having 100 percent electronic communication, and they do not include telephone contact information. When designing a Web site, one must not forget the customer and the importance of communicating with the customer in the method they desire. Often the preferred method for some communication is not electronic.
Web Site Development
A company's Web site must project its brand image. People coming to the company's site may not know anything about the company. They may have simply found the site on a search engine. Thus, the site should convey what the company is and what the company has to offer. It should be easy to navigate. Users are not going to wait for graphics to load; if they take too long, they will exit. It is important to access your Web site the way that most customers will access it. If most of your customers are individual consumers, access the site from a modem. Some sites offer a choice of formats, a simple version for low-tech users and a version with enhanced graphics for those who have the technology. The site should also be organized so the users can quickly get to the information they need. Table 16-3 is a summary of the advice of Internet marketing experts regarding the design of a Web site.
Business-To-Business E-Commerce
Business-to-business e-commerce accounts for the majority of Internet commerce. This is in part due to the size of business-to-business transactions and the efficiencies the Internet offers businesses. In the hospitality industry, the Internet is being used to create marketplaces where companies wanting supplies can be matched up with sellers of those supplies, The marketplaces match multiple purchasers with multiple sellers. These electronic hubs go by
of these hubs, each buyer and seller would have to first identify each other and then contact each other. This process would have to be repeated each time a transaction took place. With the electronic hub, the searching and contacting is done automatically. The buyer receives the benefit of receiving offers from multiple companies, and the seller has the advantage of being linked with multiple buyers.
In addition to the marketplaces, the Internet facilitates one-to-one relationships between a buyer and a seller. Food supply companies and office supply companies use the Internet to receive orders from customers. As the Internet matures, its importance to the hospitality and travel industries will increase. The Internet has also had a significant effect on how database marketing is conducted.
Developing A Marketing Database System
To implement successful integrated direct marketing, companies must invest in a marketing database system. A marketing database is an organized collection of data about individual customers, prospects, or suspects that is accessible and actionable for such marketing purposes as lead generation, lead qualification, sale of a product or service, or maintenance of customer relationships.
Building a database involves investing in central and remote computer hardware, data-processing software, information enhancement programs, communication links, personnel to capture data, user training, design of analytical programs, and so on. The system should be user friendly and available to various departments. For example, in a hotel, reservations, sales, reception, food and beverage, accounting, and the general manager would all need access to the database. Building a database takes time and involves much cost, but when it runs properly, the selling company will achieve substantially higher marketing productivity.
Tips for Managing and Developing a Web Site
♦ Remember people coming to your site may not know anything about the
company. The site should convey the company's identity and what it offers.
♦ Make sure users can easily navigate through the site and can get back to
the home page from every page.
♦ Remember your clients are coming to you for travel services. Keep
graphics simple and enable your clients to move quickly through the site.
♦ Make sure you have a "contact us" page on your Web site. When you are
contacted respond quickly, within six hours is desired, over twenty-four hours is too long. Make sure you give clients alternative ways to contact you such as toll-free phone numbers.
♦ Collect information and e-mail address through a "contact us" area. Ask
permission to send information on specials.
♦ Make sure users can purchase your products over the Web. One hotel
offers information on availability and pricing, but makes you call the hotel to make the reservation. To make matters worse they did not have the hotel's phone number on their site. Use automatic response mechanisms when appropriate, such as confirmations of reservations.
♦ Hillary Bressler states that a challenge faced by hotels is that sales leads
don't trickle down from their corporate Web sites. A "microsite" or page linked to the corporate site to provide information about your hotel can solve this problem.
♦ Keep on top of the search engines to make sure your site comes up in the
top listings. If you do not have the internal resources to do this, hire outside expertise.
♦ Keep up with new trends of communication such as wireless phones,
PDAs, and other devices.
THE INTERNET MAKES IT EASY FOR CUSTOMERS TO
FIND PRICE INFORMATION
Hotel used to sell excess inventory to wholesalers. The wholesalers would then bundle the rooms with air, ground transportation, and other activities creating a package. The package would then be advertised and sold through travel agent. The person that would buy the package was usually not the hotel’s customers. Thus, the wholesaler created extra demand for the hotel, justifying selling the rooms at a lower rate to the wholesaler. The Internet
some wholesalers contract for inventory and simply resell the inventory over the Internet, in direct competition with the hotel.
Competition should increase in the future as consumer advocates are teaching consumers to check Internet wholesalers. Jayne Clark, in an article in USA Today, write that consumers should first check the hotel’s Web site, then check the site of two hotel discounters, then call the hotel’s toll free number and ask for any discounts for which they might qualify such as the Automobile Association of America or hotel and airline loyalty programs, then go back and recheck the discount sites again. Following her process we came up with the result on the facing page for a weekday room booked two weeks out.
E-Business Barriers
If e-commerce is so hot, why has it still made no major impact in India? There are many reasons.
Internet usage
If computer usage itself is insignificant, Internet usage is almost non-existent. The largest ISP, VSNL, has about two and a half-lakh subscriber. All the other ISPs put together may add an equal number. E-commerce happens over the Internet and with low Internet usage. The governments role also seems useless when compared to forecasts which promise telephone lines to 15% of the country by 2010!But maybe our internet usage will speed up due to the fact that industries, services i.e. banking, appliances etc are being net based. Also, the introduction of wireless application protocol and generalized radio services internet and other forms of electronic exchange will come onto the scene.
Bandwidth
The lack of bandwidth is a major cause for concern. Currently all international connectivity is through VSNL and is limited to a very slow speed of 165megabits per second compared to other countries i.e. in China the speed is of almost 2 gigabits per second. But there have been have several applications with the DoT by small ISPs to set up their own gateways, which would definitely mean the introduction of newer and faster technology.
Cyber laws
Cyber laws
People have had problems of non-delivery of orders placed on Rediff on the People have had problems of non-delivery of orders placed on Rediff on the Net.
Net. And And it it takes takes only only one one scam scam to to shake shake the the confidence confidence from from the the system.system. Legal shelter is extremely imperative for confidence to build up.
Legal shelter is extremely imperative for confidence to build up. Then there isThen there is the
the ississue ue of of insinsuraurance nce agaagainsinst t frafraud. ud. WheWhethether r the the cencentratralizlized ed insinsuraurancence agencies,
agencies, which are opposed to the very idea of which are opposed to the very idea of privatization, privatization, will will provideprovide low-premium insuranc
low-premium insurance cover to e cover to a high-risk, totally intangible-based area likea high-risk, totally intangible-based area like transaction indemnity anytime soon is anybody's' guess. The lack of a secure transaction indemnity anytime soon is anybody's' guess. The lack of a secure online payment mechanism and the continued debate on passing the Digital online payment mechanism and the continued debate on passing the Digital Signature Act are all major stumbling blocks.
Signature Act are all major stumbling blocks.
Business-to-business sites are comparatively better off, as they normally have Business-to-business sites are comparatively better off, as they normally have negotiated-contracts, with governing laws and jurisdiction set out clearly. negotiated-contracts, with governing laws and jurisdiction set out clearly. Also, the transactions are normally between known entities that have, or are Also, the transactions are normally between known entities that have, or are actively looking for long
actively looking for long business relationships.business relationships.
Digital identity
Digital identity
How can you trust the site you are doing business with? Similarly, how does How can you trust the site you are doing business with? Similarly, how does the site ensure that you are not
the site ensure that you are not using a stolen credit-card number? The answer using a stolen credit-card number? The answer to this is digital certificates. But, to issue a digital certificate, you need an to this is digital certificates. But, to issue a digital certificate, you need an extremely trustworthy agency issuing the
extremely trustworthy agency issuing the certificate of identity.certificate of identity.
Inter-state goods movement regulations
Inter-state goods movement regulations
Anyone involved in selling and shipping goods across the state borders will Anyone involved in selling and shipping goods across the state borders will testify what a nightmare this can be. No two states have the same sales tax testify what a nightmare this can be. No two states have the same sales tax and excise-duty rules. The rates differ, the forms to be filled in differ (so do and excise-duty rules. The rates differ, the forms to be filled in differ (so do the rates of bribe). And
the rates of bribe). And then there’s octroi.then there’s octroi.
Setup and infrastructure costs
Setup and infrastructure costs
In spite of what many vendors would want you to believe, e-commerce is not In spite of what many vendors would want you to believe, e-commerce is not a one-man operation that can run from a couple of servers stashed away in a a one-man operation that can run from a couple of servers stashed away in a co
cornrner er in in a a babasesemementnt. . EqEquaualllly y bibig g is is ththe e cocost st of of sosoftftwawarere, , WeWeb-b-hohoststiningg services, bandwidth, and proper security…All these could add up to quite a services, bandwidth, and proper security…All these could add up to quite a big
big amount, amount, both both in in initial initial investments investments and and in in running running costs. costs. Though Though asas industry progresses several companies that offer specialized services have industry progresses several companies that offer specialized services have
outbound logistics for offline companies that want to go online, SEEC, will outbound logistics for offline companies that want to go online, SEEC, will help online companies to adapt to new technology. New software like Screen help online companies to adapt to new technology. New software like Screen Scraping or Legal Wrapping etc have revolutionized infrastructure support Scraping or Legal Wrapping etc have revolutionized infrastructure support system in India.
system in India.
Advertising costs
Advertising costs
The Internet is often likened to a high-speed digital highway with millions The Internet is often likened to a high-speed digital highway with millions passing by
passing by every minute. every minute. No way! No way! It’s more It’s more like a like a mess of mess of alleyways that alleyways that nono one has ever mapped out.. Having a cool Website will not bring in people. one has ever mapped out.. Having a cool Website will not bring in people. People come to a Website either by typing the URL directly in their browser, People come to a Website either by typing the URL directly in their browser, or by clicking on an interesting link seen on some other site. Either of these or by clicking on an interesting link seen on some other site. Either of these costs a lot of money.
costs a lot of money.
Again, in the case of business-to-business sites, this may not be a major Again, in the case of business-to-business sites, this may not be a major factor.
factor. All
All thethese se are are appappliclicablable e to to busbusineiness-ss-toto-co-consunsumer mer e-ce-commommercerce. e. In In cascase e of of business
business to to business, business, the the very very high high cost cost of of building building the the systems systems is is often often thethe biggest
biggest stumbling stumbling stone. stone. And And it’s it’s often often a a Catch Catch 22 22 situation, situation, with with everyoneeveryone waiting for others to start off, so that they can see the results and then follow. waiting for others to start off, so that they can see the results and then follow. Hopefully, some one will…
Hopefully, some one will… The
The IntInternernet et is is a a comcomputputer er netnetworwork k thathat t conconnecnects ts milmilliolions ns of of comcomputputersers globally and provides worldwide communications to business,
globally and provides worldwide communications to business, homes, schoolshomes, schools and governments.
and governments.
Internet has grown explosively in the 1990s. There is more than four million Internet has grown explosively in the 1990s. There is more than four million server computers on the Internet, each providing some type of information or server computers on the Internet, each providing some type of information or se
servrvicice. e. WoWorlrld d WiWide de WeWeb(b(WWWWW)W), , ththe e nenewewest st InInteternrnet et seservrvicice, e, hahass accelerated the growth of the Internet by giving it and is to use, point and accelerated the growth of the Internet by giving it and is to use, point and click graphically interface. Users are attracted to the WWW because it is click graphically interface. Users are attracted to the WWW because it is interactive, because it is to use, and
interactive, because it is to use, and because it combines graphical text, sound,because it combines graphical text, sound, and animation making it a
and animation making it a rich communication medium.rich communication medium. The WWW is many things to its millions of users. It
The WWW is many things to its millions of users. It is used as a market place,is used as a market place, art gallery, library, community center, school, publishing, house and many art gallery, library, community center, school, publishing, house and many more. It is based on documents called pages that combine text, pictures, more. It is based on documents called pages that combine text, pictures, forms, sound, animation and hypertext links called hyperlinks. These web forms, sound, animation and hypertext links called hyperlinks. These web pages
pages are are prepared prepared using using the the Hypertext Hypertext Mark-up Mark-up Language Language (HTML). (HTML). ToTo navigate the WWW, users “surf” from one page to another by pointing and navigate the WWW, users “surf” from one page to another by pointing and clicking on the hyperlinks in text
clicking on the hyperlinks in text or graphics.or graphics.
The World Wide Web is non-linear with no top, or no bottom. Non-linear The World Wide Web is non-linear with no top, or no bottom. Non-linear means you don’t have to
the Web is not hierarchical and can handle graphics, it offers a great deal of the Web is not hierarchical and can handle graphics, it offers a great deal of flexibility in the way information resources can be organized, presented, and flexibility in the way information resources can be organized, presented, and described. Thus one can:
described. Thus one can:
•
• Jump from one link (resource) to another Jump from one link (resource) to another •
• GGo o ddirireectctlly y tto o a a rresesooururce ce iif f onone e knknow ow tthe he UUninifoforrm m RResesooururcece
Locator(URL) Locator(URL)
•
• Even jump to specific parts of a documentEven jump to specific parts of a document
No other
No other medium has medium has this big this big an an audience. More audience. More than 1,00,000,000 than 1,00,000,000 potentialpotential educated people access the net. This tremendous growth of the educated people access the net. This tremendous growth of the Internet, and particularly the World Wide Web, has led to a Internet, and particularly the World Wide Web, has led to a cr
critiitical cal masmass s of of conconsumsumers ers and and fifirms rms parparticticipaipatinting g in in gloglobalbal on
onliline ne mamarkrketetplplacace. e. ThThe e rarapipid d adadopoptition on of of ththe e InInteternrnet et as as aa co
commmmerercicial al memedidium um hahas s cacausused ed fifirmrms s to to exexpeperirimement nt wiwi6t6thh innovate ways of marketing to consumers
innovate ways of marketing to consumers in computers mediatedin computers mediated eenvnviirrononmementntss. . ThThe e pprresesenent t ppopopululaariritty y oof f tthhe e WWWWW W aass co
commmmerercicial al memedidium um is is dudue e to to itits s ababililitity y to to fafacicililitatate te glglobobalal sharing if information and resource, and its penitential to
sharing if information and resource, and its penitential to provideprovide an efficient channel for advertising, marketing and even direct an efficient channel for advertising, marketing and even direct distribution of certain goods and
distribution of certain goods and information survives.information survives. The 1990,s developments where as follows :
The 1990,s developments where as follows :
1990 The ARPANET is
1990 The ARPANET is dissolveddissolved Gop
Gopher her is is devdeveloeloped ped at at the the UniUniverversitsity y of of MinMinnesnesotaota. . GopGopher her prproviovides des aa hierarchical, menu-based method for providing and locating information on hierarchical, menu-based method for providing and locating information on the Intranet, This tool mails using the Internet much easier.
the Intranet, This tool mails using the Internet much easier. 1993
1993 The European Laboratory for Practical Physics in Switzerland (CERN)The European Laboratory for Practical Physics in Switzerland (CERN) releases the World Wide Web (WWW), developed by Tim Berbers-Lee. The releases the World Wide Web (WWW), developed by Tim Berbers-Lee. The WWW uses hypertext transfer protocol (HTTP)
WWW uses hypertext transfer protocol (HTTP) and hypertext links, changingand hypertext links, changing the way information can be organized, presented and
the way information can be organized, presented and accessed on the Internet.accessed on the Internet. The NSFNET backbone network is upgraded to “T3” which means that it is The NSFNET backbone network is upgraded to “T3” which means that it is able to transmit data at speed ofd45 million bits of data per second, or about able to transmit data at speed ofd45 million bits of data per second, or about 1400 pages of text per second.
1993-94 The Graphical web browsers Mosaic and Netscape Navigator are introduced and spread through the Internet community. Due to their intuitive nature and graphical interface, these browsers make the WWW and the Internet more appealing to the general public.
1995 The NSFNET backbone is replaced by a new network architecture, called VBNS (Vary High-speed Backbone Network System) that utilizes Network Service Providers, regional networks and Network Access Points (BAPs). A team of programmers at Sun Microsystems release an Internet Programming language called Java, which radically altos the way application and information can be retrieved, displayed and used over the Internet.
1996 Users in almost 150 countries around the world are now connected to the Internet. The number of computer hosts approaches 30 million
What is E Business?
E-business is what happens when you combine the broad reach of the Internet with vast resources of traditional information technology systems. It uses the Web to connect together customers, vendors, suppliers and employees in a way never before possible.
The actual e-Business operation can be described as follows:
1. The client uses the web browser on the local terminal to connect to the e-Commerce site via the Internet / Intranet.
2. The site presents the client with the products/services offered
3. The client chooses to make an online transaction, and the e-Commerce site requests the client browser to enable an SSL-protected link. This link-to-link encryption offers high level of security to the entire process.
4. The e-Commerce site (also called the server), requests personal and financial information from the client that is relevant to the authentication and validation of the transaction in process. This is sent for validation to a transaction server connected to all the databases of all the supporting financial institutions. (For example, the authentication databases of MasterCard, American Express or VISA), or the internal authentication database of an
Intranet. Depending on the values returned to the transaction server by the authentication databases, the client’s transaction process is further processed. E-business really means, the extension of business systems and providing an easy-to-use interface between the external world and the organization, while increasing reach. Where one can complete the transaction online and integrate the supply chain into transaction management process.Within 30 years, the Internet has grown to the Information superhighway. Just as the railroads of the 19th century enabled the Machine age, and revolutionized the society of the time, the Internet takes us into the Information age, and profoundly affects the world in which we live. Today, some people telecommute over the Intent takes us into the information e.g. and profoundly affects the world in which we live. Today, some people telecommute over the Intent, allowing them to choose where to live based on quality of life, not proximity of work. Many cities view the Internet as a solution to their clogged highways and fouled air. Schools use the Intent Sa a vast electronic library, with untold possibilities. Doctors use the Intent to consult with colleagues half a world away. And even as the Intent offers a single Global Village, if threatens to create a 2nd class citizenship among those without access.
The web as a Model of Marketing Communications
Firms use various media to communicate with their current and potential customers. Marketing communications perform three functions: inform, remind and persuade. Most of the communications are one to many. The Internet, a revolution in distributed computing and interactive multimedia is dramatically altering this traditional view of one to many communications. The new one to one marketing communication model defining the offers a radical departure from traditional marketing environments.
The Internet offers an alternative to mass media communication. As a marketing and advertising medium, the web has the potential of radically changing the way firm do business with their customer by blending together publishing real-time communication broadcast and narrowcast as an operational model of distributed
computing, the net supports –
– Discussion groups (e.g. USINET news, moderated and immoderate
mailing lists)
– Multi-player games and communications systems 9e.g. chat) – File transfer (ftp) remote login (telnet)
– Electronic mail (e-mail)
– Global information access and retrieval systems (e.g. archie, vernica
gopher and WWW)
Why World Wide Web?
Six fundamental capabilities of the WWW give it the comprehensive advantage over media. These are as
follows-1. Global dissemination- with connectivity in over 100 countries, international communication is a fundamental facet of the web.
2. Customization- Information can be maintained centrally on a network server and still be displayed, accessed, and disseminated on an individual basis.
3. Interaction- Two way or multi-channel communication is possible on the net. You can get immediate and focused feedback from customers and forward the on-line customer queries to appropriate internal resources so that necessary action can be taken.
4. Collaboration- Seamless access to shared data, project co-ordination and co-ordinate information management resulting in enhanced opportunity for joint development for innovative products and services.
5. Electronics Commerce- Support for online ordering, purchase orders, inventory and delivery tracking.
Integration- One can link on-line activities with internal, backend processes for maximum impact, distribution information and customer interaction across functions, and promote new business applications.
GROWTH IN THE NUMBER OF WEB SITES
DATE NUMBER OF WEB SITES %. COM SUTES
6/93 130 1.5 1/94 623 4.6 6/94 2,738 13.5 1/95 10,022 18.3 6/95 23,500 31.3 1/96 1,00,000 50.0 6/96 2,30,000 68.0 1/97 6,50,000 62.6 6/97 1,325,000 67.4 1/98 2,843,000 70.2 6/98 4,264,500 69.8 1/99 5,117,400 76.3 6/99 7,676,100 80.4 1/00 16,887,420 79.4 6/00 25,331,130 76.7
INDIAN OVERVIEW OF E-MARKETING
The Indian private sector has already recognized the attractive economics of e-business. Clearly, the opportunity (and the need) for Indian businesses to get onto the e-business power curve is really quite high. Needless to add, that the potential exists. The size of the transactions were over the net was Rs10 crore, a piddling size when compared to the world, which is expected to cross $900 billion by the year 2007.
Unlike in the past, where existing attitudes have posed major challenges to adopting a new way of life, with the Internet it has been rather a smooth sailing, thanks to the extraordinary levels of Internet awareness in the country. As a result of this, companies have been more open to taking studied chances, as is evident. Here, we are not just talking of companies that have static web sites but those which conduct commerce on the net like Color Plus, India Book Shop, bababazaar, Rediff-on-the-net and Shoppers Stop, selling from books and shirts to vegetables and soaps.
The lack of infrastructure was a serious impediment, but bottlenecks are soon being removed. With several private value-added networks (VANs) coming up and with the reach of Internet expanding, this is becoming less of a problem.
In fact, collective experience indicates that firms can deploy e-commerce solutions over the current infrastructure and realize significant benefits from them. To be fair, this is one area that has received focus from the highest levels and there is feverish activity to build bigger bandwidth and crucial payment gateways, which will enable online credit card authorization
Indeed, there is much at stake for, say, an automobile company or a fast-moving consumer goods company which has multiple offices with different manufacturing sites and warehouses etc across the country. Infact ,Dynamix-a software infrastructure solutions company, is in the process of helping TELCO to replicate the Ford “just in time technology” The recent announcement of Hindustan Lever indicates that soon all of its cosmetic line will be made available only on the net, with one center in each city acting as demonstration/guidance center.
The country needs to get its legal, legislative, regulatory, infrastructure and manpower ready for ebusiness. We already see some of this readiness, and hence, India is ready to boom in ebusiness. While the air of optimism persists, the fact remains that in India Electronic Data Interchange (EDI) has not really
taken off. Therefore, doubts persist whether corporate and government in specific will adopt and accept this as quickly as is made out. One of the main reasons is the high entry cost of EDI because of which companies fight shy of trying out.
The ratification of financial transactions reconciled without paper via the internet by the Reserve Bank of India. A critical issue, it is expected to be resolved once the government passes the Electronic Support Act and the Information Technology Bill. Institutions such as RBI and SEBI are considering various ways to make usage of electronic systems mandatory for areas such as interbank settlements, payment of dividends etc. These bills also contain a comprehensive range of provisions that are expected to usher in e- business in India.
To add to this government incentive has been minimal in the past. However, the fact that EDI-related issues are being addressed by the government, is again indicative of the change in the offing. For instance, government agencies like ports are moving to exchanging documents through EDI and are planning a complete move to accept documents in only EDI. Similarly, a major pilot project in the auto industry was successfully completed last year by ACMA (Auto Component Manufacturers Association), paving the way for
Welcome to the new invasion of technology in the Indian
banking system.
In developing countries like India with a vast majority of the population living in poor conditions, technology plays an important role. Technology to the extent that it helps to reduce costs is a welcome I India. This could be explained by the fact that to process a banking transaction manually it costs around Rs30-40 where as the same transaction on the Internet would cost Rs.7-8.
In countries like India technology acts as a leveler that removes inequality between people of different income groups. For example poorer people who visit banks for their regular banking activities feel that an unequal treatment is meted out towards them as against their richer counterparts, especially with the insignificant sums of tier transactions; while the same people feel more at ease with an ATM that shows no emotion and all clients are treated alike
Internet hits the Indian banking sector
Today you send an email or pick up a telephone and your banker lands at your doorstep. Welcome to the new invasion of technology in the Indian banking system! The liberalization and the technology-invasion have worked wonders for the banking sector, say bankers. If ICICI has shown what technology can do for banks, others have quickly realized the potential and are fast trying to catch up with it. Is technology then the new driver in the Indian financial system? When all the banks and financial institutions are offering the vanilla product, the differentiation had to come from service. This automatically put pressure on the institutions to adopt technology as their USP. According to industry estimates, some of these new banks on an average send out 500 emails on a daily basis regarding new products, services, or other routine matters.
Internet banking is fast catching up. Banking will never be the same again in India.
Welcome to the new invasion of technology in the Indian
banking system.
ICICI announced a tie-up with a Compaq-led consortium for setting up the country’s first payments gateway to facilitate secured on-line B2B and B2C e-commerce transactions.
This will be the first payment gateway tailored to meet Indian requirements and will not be subject to all the regulatory concerns that cloud other non-India based payment gateways. The gateway offers the flexibility of multiple payment modes including credit, debit and smart cards, direct bank debits and e-cheques. The ICICI e-commerce payment gateway will launch a state-of-the-art internet payment system and is set to open the world of e-commerce to many more merchants, consumers and businesses in India by significantly lowering the cost and complexity of enabling secure transactions over the Net .The customers credit card number will be protected through hardware cryptographic devises so that the only information available to merchants is a code. This will substantially reduce the capital costs of merchants.
MOVING “TOWARDS E-BUSINESS…..”
The statistics show that 90% of all new businesses fail. We believe that is a direct result of the failure to plan. Take the opportunity to plan and increase your chances of success. While preparing for this topic there were several examples as well as case studies that we reviewed. These like most others left us starry eyed. They seem o have this effect on most people our age. But E-Business is not only success stories. There are several stumbling blocks that young entrepreneurs have to face. There are several startups that do not meet the “eyeball”.
Here we have tried to explain the tribulations that go into creating a “.com” and “moving towards the e-business”. We have made a comprehensive but necessarily an exhaustive e-business model.
There are 4 types of businesses that can be carried out over the Internet. They are:
1. B2B : that is Business to Business transactions that take place on line. For example “dell.com”. This company sells computers to several other enterprises via the internet thus eliminating the middleman and reducing costs by a great deal.
2. B2C : that is Business to Consumer transactions that enable companies to get in touch with, service and make sales to their customers via the world wide web. For example “rediff.com” which sells everything right from music to books on the net.
3. C2B : that is Consumer to Business transactions where in the consumers specify their requirements and the business tries to meet them. Thus the consumer gets the best bargain and businesses face fair competition. Eg “priceline.com”
4. C2C : that is customer to Customer transactions where in customers trade within themselves through auctions. Eg.” Ebay.com”
With the changing times in the age of net ,e-business cannot be just restricted towards being merely a B2b and B2C but with time it has also grown and is clearly even developing as C2C and C2B.e.g. ebay.com and price line used by various airlines like delta.com . The prices of tickets are no longer fixed but depend upon the place, time of booking, destination etc. and not necessary that the price paid by the passenger boarding the flight will be the same as the rest of the passengers. In fact, now it is the customer who makes the offer and the organization has to make the counter offer.
The basic question to ask is whether to go online or offline?
You could judge your business on these
criteria-1. Whether the decision is an information intensive purchase decision?
This will help in a way e.g. say a commodity like matchbox there is hardly any need for any information before hand while purchasing one. hence, e- business would not be advisable.
2. Price , selection and frequency of change in the product ?
A product like a personal computer. which keeps on innovating very fast due to technological advancements , it is extremely important to have latest information and hence e-business is important.
3. Will customization aid the user ?
In products where customization is important then business on the net is very useful. Take the example of Levis jeans, they offer you the option of designing your own jeans and have them custom made to your choice.
4. For sale of the product, is the touch and feel necessary? 5. Is there a need for new channels of distribution?
6. Is the product of the nature of a slow moving commodity?
For products like antiques, paintings etc. it is preferable to go on net since there are larger prospective customers that can be tapped at reduced costs.
7. What category of customer is the target?
In India nearly 70% of the users are in the age group of 25-40 years. Hence if it is a product that appeals to this segment e-business is the right option.
The First move towards e-business-“the idea”
1. You need a clear “Value Proposition”. Unambiguous and clear picture of your idea helps reduce cost and cycle time, increase productivity and increase bottom lines. You have to analyze what you are offering your customer in terms of value!!!!! An idea which has no impact on society is not a good idea.
A good idea is one which is
a. Scalable: this kind of an idea has a lot of scope and can expand across markets.
b. Malleable: it can adapt to new markets and can forgo what it had initially started with. It allows you to move across related businesses with ease.
c. It should not be averse to the constant addition of new features to attract eyeballs.
”Profit is an opinion. The only real happiness is cash flow.” Narayan Murthy
]
d. Unique and probably offers you “the first mover advantage”.
e. “Be distinct in the market place” you have to prove you are better than the others and in what way?
f. Your idea should have a wide application. CLEAR FOCUS IN A WIDE MARKET IS THE NAME OF THE GAME
2. Create a clear revenue model You should show source of revenue. Whether it is from sales, advertising, franchise or whatever may be the case. The source must itself have growth powers at least for the next 10-15 years. 3. “Keep the HR ratio low ”. i.e. Hype to reality. If you are unable to live up to the standards created your credibility is lost.
4. Patent the idea: “The world is your oyster and entrepreneurs are global people”. If not in India patent your idea with an international authority, it may
cost a bit more but it is worth it as against the risk of losing your brainchild. 5. Try and get a digital certification. It helps you to certify the real identity of the merchant. There are only 2 companies that provide digital certification ie. Verisign and Thawte. The former does not give certification to Indian companies and the later is soon going to be taken over by the former. So, in this case one could
A .Set a subsidiary in the USA.
B. Take up secure space with another company
C. Tie up with a US agent, which charge a high price per transaction.
"Anyone who thinks the customer isn't right, should try doing without them for ninety days."
6 . Know your client . On the Internet it is very easy to lose customers. Your client would most probably be from a higher income group and therefore usually a well read and opinionated bunch. These are the kind of people who get you other customers by their word of mouth publicity. A single dissatisfied client can spell disaster as seen in the case of Walmart: the superstore. One dissatisfied customer started a site called “Walmartsucks.com” as a sign of protest against the company and to date this site has attracted the several aggrieved customers of the store and has a million hits a day!
7. Know your competition. E-business faces competition from the real as well as the virtual world. Your competitor is just a click away. You have to be constantly alert and aware of the features being offered by him in order to keep your “critical mass” and retain your “first mover advantage”.
8. “Build a good team”. Your team should have mutually exclusive and collectively exhaustive skills. Team members should be experienced, energetic and enthusiastic. Get members from every field to make up for each other’s deficiency.
9. The team should have a shared vision. “Aspirations that can be achieved asymptotically” Microsoft has a shared vision of one P.c. for every task. This is a vision, which also serves as a continuous ongoing ambition.
10. Identify a clear leader . There should be no diffused authority. There should be only one leader, some one who brings more value to the table than the others.
11. Have a clearly defined value system. A value system is like the rudder in the ship to show you path in times of tribulation.
"Even if you're on the right track, you'll get run over if you just sit there."
-Will Rogers
12. The most important decision. SHOULD YOU GO IN FOR VENTURE CAPITAL?
Clearly identify what stage of funding you are at. Is your business a start-up, initial growth, positioning for going public, seeking a strategic partner, looking for near future acquisition or sale?
The options before you are
Incubators
Incubators are those individuals who fund you from the very nascent stage right from the conception of the idea.
Angels
Angels are individual private investors who make up a large portion of "informal" venture capital. These investors usually keep their money close to home . They tend to invest small amounts, and they can be difficult to locate because they usually don't belong to networks or trade associations.
Angels are found among friends, family, customers, third party professionals, suppliers, brokers and competitors. For the most part, once they invest in two or three deals they are out of money.
Venture Capital
These investors are out looking for huge returns not just good ones. Venture capital is extremely hard to get and the competition is fierce. Venture capitalist funds are only about 0.7% people, who come to them for funding. If you can afford it to, if your business model doesn’t warrant it, as far as possible avoid Venture capital for the following reasons.
a. If venture capital is resorted to the CEO does not get more than a 10% share in profits.
b. If the venture capitalist decides that you are not CEO material though you are a technological genius and though the idea belonged to you they will appoint an alternative CEO who will put an additional strain of 8-10% on the profits.
c. You may want to reserve 30% post IPO equity for your employees, which would not be possible should you go in for venture capital.
However venture capitals are not all negative and no positive
a. Venture capitalists provide you with the necessary finance without which your idea is of no consequence.
b. They build your confidence by showing their faith in you and investing in you.
c. They connect you with a prospective customer network and key employee network.
Exit Strategy
Funding Sources want to know how you plan to pay them back. Will the business generate a cash flow large enough to support the debt? Is the product or service so in demand that the company will go public? These questions and more will not only help determine your success, but they will also narrow your search for the lender most likely to fund your request.13.
Prepare an inspirational model
of what kind of wealth you want ateach stage; right from the angel investor stage to the IPO stage. Having this model ready you are in a better bargaining position.
14.
Make sure your interests are protected
.
Should the venturecapitalists appoint another CEO over you Keep a 50% option vested the day after the CEO joins.
15.
Do not shop around
after you have finalized your venture capital. Theventure capital community, especially in India is a small, close knit one and should this word spread no one will be willing to fund you.
16.
Plan your supply chain
.
Online businesses also require huge externalinfrastructure support systems. The good part is that there are software companies like Euclid,SEEC etc which provide outward as well as inward bound logistics.
17.
Hire a lawyer
or a consultant to help you negotiate carefully.Today it is possible to offer a host of “anytime, anywhere facilities “ due to the Internet, wireless and mobile paradigm. Facilities that were previously on
desktop can be provided at the touch of a button. The aim of entrepreneurship is to make the computer as ubiquitous as electricity. This is possible with the assistance of multimedia and interrupt based alert mechanisms. For example if a person wishes to bid at an auction for a certain price he could have his interrupt based alert mechanism give him an alert signal on his palmtop irrespective of where he might be as the bid draws closer to his offer price. In a similar manner tickets , books and a host of other items can be bought using the interrupt base alert mechanisms.
"Doing business without advertising is like winking at a girl in the dark, you know what your doing, but nobody else does."