2.3 The Net Economy


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Kunnskapskilden –  E-Business





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The E-Business, the E-Customer, their Relationship and Interactivity



KunnskapskildenE-Business –
E-Business, E-Customer, Relationship and Interactivity


The E-Business, the E-Customer,
their Relationship and Interactivity 

Jan Vig


Dissertation  av Jan Vig om E.Business, E-Customer, Relationship and Interactivity  (286 sider) i forbindelse med Masterstudie i Information Technology and Communication Juni 2000.


The E-Retailer Business, the E-Customer,
their Relationship and Interactivity

Table of Contents

Chapter One Introduction to the study

Chapter Two Business in Cyberspace

Chapter Three E- Retailer Commerce

Chapter Four E-Customer, Relationship and Interactivity

Chapter Five A Successful Case study – Amazon.com

Chapter Six The Future, Critical Success Factors, E-Business Strategy, Results and Conclusion




Chapter 2

Business in Cyberspace 


Chapter Two Business in Cyberspace

2.1 Introduction
2.2. The new digital world

2.3 The Net Economy
2.4 The interactive marketplace
2.5 Business in Cyberspace
2.6 E-Business, Organisation and Culture Change
2.7 Trends
2.8 Web Design, Usability and Communication
2.8.1 Web Communication
2.8.2 Web Design and Communication
2.8.3 Usability
2.9 Interactivity, Flow and Stickiness
2.9.1 Interactivity
2.9.2 Flow
2.9.3 Stickiness
2.10 Summary




The Net Economy


“Fundamentally, the Net Economy means creating, managing, and leveraging technology in entirely new ways”
“The Net Economy is fundamentally changing the way companies do business.
The Net Economy is enabling companies to find new ways to create – and keep – customers; leverage entire communities of suppliers and distributors;
accelerate and augment their product and services life-cycles; and evolve their business models to win”. (Barksdale, n.d)

Competing in the Net Economy requires that companies take advantages of the information technology in entirely new ways, by offering services via the Net for large communities of customers, partners and suppliers


In the Net Economy, business issues and technology issues go hand in hand. In a globally networked business environment, understanding how technology can help the company build new revenue streams and reduce expenses is a critical part of making the company successful. Overall, electronic commerce has the potential to be more than just a means of conducting transactions. Electronic commerce creates a new business environment, different from any we’ve seen so far, because it lets a business put its entire set of processes and practices online.
The opportunities are tremendous: better communication both inside and outside the business, better movement of documents and information, more customer feedback on products, shorter product cycles, quicker time to market, and the ability to offer customers personalised products and services.


The power of EC (E-commerce) is the power of communication.
The power to target and focus this communication to the people that matter most to businesses.
The ability to have personalized communication available 24 hours a day 7 days a week,
and to harness that communication to increase the transfer of information. (Bolton, n.d)


As Davis and Meyer (1998) points out, the Internet and other enabling technologies are shaping the net economy and tomorrow’s business world in three fundamental ways:


  • Increasing Speed – as every aspect of business and connected organisations begins to operate and change in real time.
  • Increasing Connectivity – as everything is becoming electronically connected to everything else (products, people, companies, and countries).
  • The Rise of Intangible Value – products and services blur into offerings that have both tangible and intangible economic value, with the intangible value growing faster


Businesses have to consider the following criteria to be able to succeed in the Net Economy (Barksdale, n.d.)


  • The E- Business solution has to address all aspects of Business from start to end.
  • The E-Business solution has to manage both internal and external relationship completely
  • The E-Business solution has to accommodate the complex nuances in business trading agreements and interaction that are unique to the partners
  • The E-Business solution has to be able to extend legacy systems across the entire community.



Further, companies have to go through a painful transition process as the rules of the game will change.
According to Meyer (1999) there are 10 driving principles of the New Economy, which taken together constitute a revolution in business:


  1. Matter
  2. Space
  3. Time
  4. People
  5. Growth
  6. Value
  7. Efficiency
  8. Markets
  9. Transactions
  10. Impulset 



In the Net Economy change is creating numerous of opportunities. Digital transmission over public networks such as the Internet creates the ability to exchange information, negotiate deals, provide identification, and communicate more efficiently and effectively than anything that came before it in the physical world. The new gatekeepers of these information pipelines are business-unit managers attempting to enhance relationships with customers, rather than the intermediaries and IT departments that made their living on restricting that interaction. The new gatekeepers have the opportunity to develop these pipelines into sustained transaction flows driven by one-to-one relationships.


One of the most important things in the new digital world is how to measure the Internet Economy. According to the Center for Research in Electronic Commerce (1999), there are Four Layers of the Internet Economy


  • Layer One: The Internet Infrastructure Layer
  • Layer Two: The Internet Applications Layer
  • Layer Three: The Internet Intermediary Layer
  • Layer Four: The Internet Commerce Layer



It is important to note that many companies operate at multiple layers.


The study presents the following key findings:
  • Internet Commerce is much bigger today than any previous estimates
  • The Internet Economy is growing at an astounding rate.
  • The Internet Economy already rivals century-old industries“ In just five years (since the introduction of the World Wide Web), the Internet Economy already rivals century-old sectors like energy ($223 billion), automobiles ($350 billion), and telecommunications ($270 billion) in size.”
  • The Internet Economy has had a major impact on jobs and responsibilities
  • Infrastructure and applications players make up over half of the Internet economy
  • Internet intermediaries are critical to Internet Economy growth
  • The Internet Economy by itself is one of the major economies in the world
  • Internet Infrastructure companies have the highest revenues per employee
  • Major corporations, not just start-ups, are fueling the Internet Economy
  • The market value of U.S. companies with substantial Internet revenue exceeds $3 trillion




Below the figures from the report:


Estimated InternetRevenues Attributed InternetJobs
Internet Infrastructure Layer $114,982.8 M 372,462
Application Infrastructure Layer $56,277.6 M 230,629
Intermediary/Market Maker Layer $58,240 M 252,473
Internet Commerce Layer $101,893.2 M 481,990
The Internet Economy Indicators $301,393 M 1,203,799

Table 2.1 Figures for the Four Layers of the Internet Economy


The conclusion of the report is that the research has yielded figures that exceed all prior estimates.

Download Dissertation


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Jan Vig
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Copyright © 2000-2015 VIG CONSULTING

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