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Chapter 3. Internet Business Strategy > The Internet Value Proposition

The Internet Value Proposition

Internet commerce must start with a strategy, and the analysis of strategy starts with value. What are the sources of Internet value? We believe the ability of the Internet to change the landscape of commerce comes from two key ideas: the Internet can be used to transform customer relationships, and it can displace or alter traditional sources of business value. These two ideas lead in turn to four basic strategies for a business to consider both in exploiting the Internet and in defending itself against competitors.[3]

[3] These ideas are largely attributable to Shikhar Ghosh and were described in “Making Business Sense of the Internet” in Harvard Business Review (March–April 1998).

Transforming Customer Relationships

By exploiting the Internet, many aspects of traditional commerce can evolve from being supplier-centered to being customer-centered, as shown in Table 3-3. This idea leads to two business strategies: a customer-centered business organized around a product or organized around meeting all the needs of a particular group of customers. We call the first approach the channel master strategy and the second the customer magnet strategy.


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