Week Five

Ok so this week has been another week in the 'on-line' learning environment. We have had no class time. This week we are looking at Business Models.

Describe the features of each of these business models. Give an example of each.

Brokerage.
This model is a model where the business creates a market by bringing together buyers and sellers and creating a transaction. The Business generates an ongoing profit by charging a commission on the sale. The commission arrangement can vary from the buyer paying, the seller paying, any combination of the two or set prices and percentages. Arguably the most famous business that is in this category is EBay.

Advertising.
This is the model where, obviously, the business makes it's profit from advertising. This model had evolved rapidly over the last decade. Things such as paid placement advertising in search and link advertising allow for a much more direct advertising method and are far less intrusive and annoying that the popular banner and flashing banner models of the 90's. Another important development within this model has been the ability to track the impact of the advertising through data collection such as the click through rates. The most obvious example for this model is Google Ad's.

Infomediary.
This I have found, is a hard business model to describe. The term Infomediary is derived from the words information intermediaries. From what I have read on the net and in particular Rapper's sight, this model helps both businesses and consumers by providing information about products or services. Information is analyzed and used to target advertising to the people who will be most likely to be interested in the product or service. Infomediary companies usually offer a service or allow access to sites or information on the condition that the user registers and logs in. This process of registering and logging in creates, as we have looked at earlier in the course a data stream for the companies to analyze and then use for marketing purposes. An example of an Infomediary business I would think would be Google. 

Merchant.
A merchant is basically a business model that buys and then sells products or services. One of the key differences of this model is the fact that the proprietor has a much higher risk due to the fact that inventory has to be purchased, stored and then distributed. Unlike all of the above mentioned models who deal mostly in information or intangible goods, the merchant has higher over heads due to the complications of dispatch, stock purchasing and warehousing. An Example of a Merchant is Amazon.com

Manufacturer (Direct)     
This is where the person or company who makes the product is selling it directly to the end user. One obvious benefit of this model is the 'cutting out the middle man' effect. Where by the manufacturer can obtain a higher price for their product by, bye passing the wholesaler and receiving the retail margin. An example of a Manufacturer model is http://www.hoselink.com.au/.

Affiliate.
This model is again one that deals in an intangible service. The Affiliate model raises revenue by helping other businesses make sales by directing traffic from one site to another. The value is measured by the click through rate, that leads to sales. A real benefit to this model is that it has very little overheads and it usually does not cost the merchant anything at all until it yields results. An example of this model is www.ultimate-guitar.com

Community.

This was the hardest yet to define. Short of cutting and pasting something that I didn't understand, which I have avoided thus far I have had trouble with this one. From what I can gather this is a model where users band together in chat rooms and forums and swap information. I can see from Rapper's site that revenue sources from such a model rely on donations, sales of ancillary (support) services or products and contextual advertising. Also as Rapper stated in his podcast often businesses will have more than one model. From what I have read on his site and others, this model may well work concurrently with a subscription model.

Subscription.

This is a model where the consumer is charged a periodic fee for a continuing service or for the use of a product. This model has become more popular in recent times, as businesses sell subscriptions rather than one off items to a consumer. The person is charged the same amount regardless of usage. This obviously has the potential to be beneficial or detrimental to the customer. An example of this model that I have dealt with just today is Nortin Anti Virus.

Utility.
In this model the consumer is charged for what they use. It is a metered system and is common for lower priced purchases such as news paper articles and other information. A benefit of this model over ones such as subscription is that the consumer only pays for what they use, this often makes a person feel better about their decision to make a purchase. An example of this model is slashdot.

In this weeks topic out line, Ian asks, What is the business model for TWITTER? It is an interesting question and also one that is difficult to give a definitive answer. I would think it has a myriad of different models. Including but by no means restricted to advertising and affiliate. While researching this question I found an interesting article at Harvard Business Online published October 27, 2009, titled 'Twitter's Business Model' here is the URL. http://www.businessweek.com/managing/content/oct2009/ca20091027_535681.htm 

Next up we are looking at the The Global Information Technology Report 2010-2011.  


1) What is the Mobile phone use/100 population - compare Australia, USA, China and India.


This is the way that the mobile phone use/100 population, is worked out as per the report.

Mobile telephone subscriptions

Source: International Telecommunication Union, The World Telecommunication/ICT Indicators Database 2010 (accessed in December 2010) (Dutta & Mia, 2011)

• Australia, 113.8 Rank 45
• USA, 90.8 Rank 76
• China, 55.5 Rank 111
• India, 43.8 Rank 119

So as we can see Australia is ranked the highest, with more than one per person.

2) Internet use/100 population - compare Australia, USA, China and India.

This is the way that the Internet use/100 population, is worked out as per the report.

Internet users are people with access to the worldwide network.

Source: International Telecommunication Union, The World

Telecommunication/ICT Indicators Database 2010 (accessed in

December 2010)  (Dutta & Mia, 2011)

• Australia, 74.3 Rank 20
• USA, 78 Rank 15
• China, 28.9 Rank 75
• India, 5.1 Rank 118

 So here we can see that the USA is the leader. India is ranked very low. I guess this is due to the huge class gap in the country and exemplified by the massive population.

I have decided to answer questions 3 & 4 together

3) Compare main strengths and weaknesses of Australia.

4) What does the survey suggest to you about the Information Technology readiness of Australian business compared to Australian consumers?

Australia ranks well in No. of days to start a business, second only to NZ. We also rank well in Financial Market Sophistication. I think that these two are both very important for the economy and set us up well moving forward. We ranked quite poorly for a developed nation in the Mobile Phone usage and in the Internet usage. Also Business usage on a whole was average so in my opinion businesses and the Australian consumer are in a similar space. 

References  

Dutta.S & Mia.I. World Economic Forum. (2011) The Global Information Technology Report 2010 - 2011. (ISBN-13: 978-92-95044-95-1).Geneva, Switzerland:SRO Kundig.