Types of Online Business Models - Assignment Example

Name: Institution: Professor: Course: Topic: Answer The Questions attached. Each Question Must be One page. Date of submission: Question One The four types of online business models are affiliate marketing, advertising, selling services and selling products. Services such as copywriting, web design, software development and editing can be carried out in order to earn revenue. It is a faster way of earning revenue since visitors to the website are offered services without having to move to offer them services. Selling products involve the sale of products that are directly created online and those that are produced by other people. The average income per customer is usually high thus enabling the business to generate more revenue. By attracting more customers, the business is capable of gaining higher revenues that can be used to improve the business. This requires more time to be dedicated to the development of the product and website to attract more and more revenue. Affiliate marketing involves a situation where one earns revenue whenever he refers a customer to purchase goods in another site. It enables businesses to increase their incomes by increasing sales. In this case, the more referral the more sales the business make and the more incomes earned. Development of affiliate marketing enables the business to make sales to even persons it did not know. Finally, advertising involves the creation of impressions aimed at attracting and retaining customers. Thus, the advertiser must use very attractive advertisement to make the customers develop the urge to buy from the business. The more impressive the advertisement is the more sales the business may make and thus increasing its revenue. For example, companies that earn the biggest revenues employ a lot of online business models Question two Virtual integration involves bringing together suppliers and customers in informal arrangements. Thus, most of the transactions between the suppliers and the customers are carried out through the internet. Such arrangements enable the suppliers to sufficiently serve their customers through a network of interconnected computers. This enables businesses to own the customers and the brand only. Designing, development of systems, products sourcing and even assembly can therefore be outsourced to the supply chain. With the changes in technological developments, supply chain activities are likely to improve. This is because of the reduction in the technological boundaries within organizations. Information technology is being linked to a multi-media and interdisciplinary system of information. That is, computer aided systems and separate databases are in the process of being linked together. This is facilitated through building of a shared framework of information. The use of information technology promotes electronic commerce. This represents a shift from the traditional vertical format. Therefore, customers and suppliers are in close contact thus facilitating transactions between them. Data is being integrated between these groups of people with the aim of boosting value chain management. Keeping supply chain management with technological improvement is useful in facilitating management of customer relations. Question Three Electronic Customer Relationship (e-CRM) is the process whereby the customer behavior is analyzed and reported by an online means. Customers are therefore able to access such information through an online means. This is aimed at attracting and retaining customers by promoting strong customer relations. It involves the collection and integration of data to enable the business to provide useful data to the customers.. In addition, data integration facilitates accumulation of money and enhancing the achievement of competitive advantage. An e-CRM involves the adoption of customer focused sales. This is different from the traditional product focused methods that enabled customers to check the prices of goods as well as to buy goods from the suppliers.. As a result, companies are realizing greater sales. The e-CRM promotes interaction between the company and its customers. Thus, marketing, sales and services are directly offered to the customers. The free interactions with the customers enable the businesses to identify and respond to their needs. Goods and services are therefore improved towards customers’ demands to facilitate their satisfaction. As the customers become the focal point of the organizations, the relationship and bond between the business and customers also increases. As the bonds become stronger, so does the customer loyalty increases. As a result, the customers are retained. This will enable the business to gain competitive advantage in the market over other competitors. Question Four Virtual communities refers to social network of persons where there is free interaction using a given social media. It goes beyond geographical and political boundaries with the main goal of achieving goals of mutual benefits. An example of an online community is the social networking services that comprise several online communities. There are different types of virtual communities. First is the internet message boards which is a forum for discussing ideas or thoughts based on specific topic. Second is the online chat room where people are able to talk to one another provided that both are online. Third is the virtual world which is more advanced than the online chat rooms. In this case, people communicate by creating their own avatars for better interactions. The fourth is the social networking services that are either software platforms or websites that focuses on the creation and maintenance of relationships. Finally, the specialized information communities allow the users to contribute and enhance connections with other users. Virtual communities are very vital for value creation in businesses. The main role of virtual communities is instant exchange of information which is never practical in the normal community. As a result, people are able to engage in several activities from home which includes shopping, information seeking and paying bills. In this context, businesses are enhanced thus creating value. Consumers usually enjoy carrying out transactions without having to travel thus boosting sales and profits. On the other hand, virtual communities make it possible to for people to develop a feeling of belonging and membership. In addition, the users are able develop stronger relationships and bonds which is useful in the day to day living. Question Five Virtual organizations facilitate the exchange of information between individuals and organizations. As `such, people are able to interact freely and build relations through online means. Thus, it is important to note that virtual organizations facilitate in sharing information and learning. Knowledge is a collaborative effort that requires an organization to be in charge of knowledge management. The virtual organizations are tasked with the role of managing knowledge. Knowledge management involves collection, capturing, sharing and construction of information. This process therefore facilitates learning and even sharing of knowledge. It involves managing what organizations know and what they need to know. Thus, organizations are able to learn new ideas as they also pass on what they know to others. This is very vital for knowledge sharing and learning. Virtual businesses facilitate learning and information sharing since it enables people and organizations to gain knowledge at very highly reduced costs. Such cheap information can be used to expand and grow businesses as well as to increase value and profitability. Through the services of such organizations, businesses are able to improve their products and services which are the main reason for businesses. In addition, it enables organizations to respond faster to the changing customers’ tastes and preferences. Virtual organizations accelerate the knowledge creation processes. This acts as a driver for new inventions and innovations. The newly invented or improved knowledge is then spread very fast through the virtual organizations which further increases knowledge sharing and learning. In addition, the organizations facilitate collaboration in the field of creating more knowledge. Thus, ideas can easily be converted into very creative products. Through virtual organizations, competencies and confidence is created in the management of knowledge and learning. Read More