The new Economy

Objectives:

  1. trace economic history of what the digital economy means
  2. Look at link between new economy and digitisation
  3. impact of new economy on strategy, organisation and management processes

What is the ‘New Economy’

Compuserver forums

  • 1980s – personal computesr
    1990s – Internet launch
    1995 – e-commerce

Post-industrial services

  • Birth of e-commerce in the 1990’s
  • The Internet as a socio-economic & socio-technical environment
  • Convergence of technologies around the Internet & E-commerce

Clicks & Mortar

  • Application of e-commerce to traditional value chains (Bricks & Mortar: physical assets)
  • Addition of digital channels to physical channels using existing infrastructure
  • Creation of virtual aspects to physical organisations of digitalisation of certain processes

Pure-play

  • The emergence of organisations with mostly virtual value chains and limited physical aspects
  • Digital-Physical (Amazon and e-tailers retailing physical goods)
  • Digital-Digital: Digital services as well as digital channels. (iTunes, Google, eBay)

Digitalisation & 5 forces (1) 

  • Increased industry based competition and innovation (Core rivals)
  • Larger threat of substitutes (indirect competition especially in service based industries
  • Schumpeter’s concept of ‘Creative Destruction’

Digitalisation & 5 forces (Contd)

  • Reduced barriers to entry in certain industries
  • Direct marketing & disintermediation
  • CRM technologies & interactive marketing
  • Lower switching costs
  • Increased buyer power and consumer information

Value chain Impacts

  • ‘Accelerated Marketing’ (Chen 2005)
  • Increased outsourcing & disaggregation (Network Value Chains)
  • Increased emphasis on CRM
  • Customer Lifetime Value (CLV)
  • New Media Channels

New Media & Web 2.0

  • Blogs, social networks & Self-evolving content
  • Media fragmentation extended the digital and online environments
  • Competing online media: Yahoo, MSN, Google & of course Facebook!

Conclusions

  • Changing parameters in macro and meso environments
  • Changing strategic practices such as network value chains
  • Evolution in strategic marketing: Digital marketing, online marketing and interactive marketing strategies
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