chapter 3 enhanced version business models exhibits and tables october 18, 2000
TRANSCRIPT
Chapter 3 Enhanced Version
Business Models
Exhibits and Tables
October 18, 2000
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Exhibit 3-1: Components of a Business Model
Value ClusterValue Cluster
Marketspace OfferingMarketspace Offering
Resource SystemResource System
Financial ModelFinancial Model
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Point-Counterpoint
Single Benefit Cluster of Benefits
Clear, non-contradictory communication tocustomer
Partnerships can be assembled with “like-minded” firms
Back office systems must be tailored to distinctbenefits
Focuses employee hiring and retention Focuses the enterprise
Customers rarely desire one benefit In the online world, back-office systems can
easily be reconfigured for different benefits With an online presence, a firm can provide
multiple benefits - with no tradeoff ofperformance (e.g. provide broadest selectionand low price)
We have examples of firms that offer multiplebenefits such as portals (e.g. Yahoo!), ISPs (i.e.AOL), product sites (BN.Com) and informationservices (WSJinteractive)
Supporting Slide 3-A:
Point-Counterpoint: Single Vs. Cluster of Benefits
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Exhibit 3-2: Shattering Myth That Consumers Care Only About
Prices On-line
19
22
23
24
24
45
49
49
58
65
0 10 20 30 40 50 60 70
Product Price
Product Selection
Web Site Navigation & Locks
Product Information
Ease of Ordering
Privacy Policies
Product Content
Product Shipping & Handling
On-time Delivery
Customer Support
PERCENTAGE OF CUSTOMERS WHO CARE ABOUT ATTRIBUTE
AT
TR
IBU
TE
Source: JP Morgan Report: etailing and the five Cs
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Table 3-1: Consumer Decision Process — Flower Example
DisposalDisposal
LoyaltyLoyalty
SatisfactionSatisfaction
Purchase DecisionPurchase Decision
Evaluation of AlternativesEvaluation of Alternatives
Information SearchInformation Search
Problem - RecognitionProblem - Recognition
PRE-PURCHASE
PURCHASE
POST-PURCHASE
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Supporting Slide 3-B:
Consumer Decision Process — Flower ExampleFlowers
DisposalDisposal
LoyaltyLoyalty
SatisfactionSatisfaction
Purchase DecisionPurchase Decision
Evaluation of AlternativesEvaluation of Alternatives
Information SearchInformation Search
Problem - RecognitionProblem - Recognition
Pre-Purchase
Purchase
Post-Purchase
Need recognition, potentially triggered by a holiday, anniversary or everyday events
Search for ideas and offerings, including:– Available on-line and off-line stores– Gift ideas and recommendations– Advice on selection style and match
Evaluation of alternatives along a number of dimensions, such as price, appeal, availability, etc.
Purchase decision Message selection (medium and content)
Post-sales support– Order tracking– Customer service
Education on flowers and decoration Post sales perks
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Flower / Gift Decision Process
Need Recognition
Search For Ideas and Offerings
Purchase Decision
Message Selection
Post Sales Support and Perks
Education on Flowers and Decoration
Exhibit 3-3: Egg Diagram for 1-800-flowers.com
Gift reminder service Holiday specials Everyday celebrations
suggestions Special occasion suggestions
Gift guru Favorite gifts Gift frequency Gift impossible Gift baskets Corporate gift services
Ideas and Information
Post-Sales Support
Product price Product picture Product description Delivery information Delivery availability
Gizmo fully-animated greeting cards
Physical cards in gifts
Order receipt email eQ&A online customer
service FAQ Customer service
inquiry form
Perks Miles earned with
flower purchases Free gifts Discounts at AOL &
BN with flower purchases
Member specials
“Care and handling” “Do it yourself” Special events and
educational workshops held at stores
Floral ideas Garden ideas Home ideas Gift ideas Gourmet ideas Store locator Recommendations by budget Best sellers
Evaluation of Alternatives
Gift Recommendations
Shopping basket E commerce transaction Special shopping features
– Delivery outside U.S.– 1-800-lasfloras.com
Product Offering
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Exhibit 3-4: 1-800-flowers.com Resource System
Online Gift Center
Online Gift Center
Integrated Partner Offers
Integrated Partner Offers
Broad Assortment
of Gifts
Broad Assortment
of Gifts
Customer Service
Customer Service
AOLAOL MSNMSN
SNAPSNAP
Wide Reach to Customers
Wide Reach to Customers
Widespread, Easy
Access
Widespread, Easy
Access
Multiple Contact Points
Multiple Contact Points
Popular Web Site
Popular Web Site
High Quality of Flowers
High Quality of Flowers
TechnologyTechnologyStrong Brand
NameStrong Brand
Name
Strong Distribution
Network
Strong Distribution
Network
TelephoneTelephone
On-lineOn-line
Franchise
Stores
Franchise
Stores
CatalogCatalog
StarmediaStarmedia
Gift Recommend-
ations
Gift Recommend-
ations
Address BookAddress Book
Gift ReminderGift Reminder
Garden WorksGarden Works
Plow & HearthPlow & Hearth
Great FoodsGreat Foods
= Activities & assets
= Capabilities
= Core Benefits
Customer Service Centers
Customer Service Centers
Integrated on-line off-
line systems
Integrated on-line off-
line systems
3,000 Affiliates3,000 Affiliates
Personalization Capabilities
Personalization Capabilities
Rich ContentRich Content
Third Party Contractors
Third Party Contractors
StoresStores
BloomNet Network
BloomNet Network
Fulfillment Center
Fulfillment Center
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Supporting Slide 3-C: Benefits and Challenges of Hybridization
BenefitsBenefits
Persistent connection with customers
New value for customers
Acces to new customers
Scalability
Persistent connection with customers
New value for customers
Acces to new customers
Scalability
ChallengesChallenges
Cannibalization
Channel conflict
Customer confusion
Investor confusion
Cannibalization
Channel conflict
Customer confusion
Investor confusion
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Exhibit 3-5 : On-line/Off-line Egg Diagram for 1-800-flowers.com
Off-line Product Offering
Special events and educational workshops held at stores
Prompts on toll free number recording Suggestions from CSRs* in stores and via phone
Prompts on toll free number recording
Suggestions from CSRs* in stores and via phone
Brochure
Suggestions from CSRs in stores via phone
Brochure
Information from CSRs in store and via phone
Brochure
Purchase in-store Purchase via phone
In-store specials Specials offered
via phone
*CSR = Customer service representative
Flower / Gift Decision Process
Need Recognition
Search For Ideas and Offerings
Purchase Decision
Message Selection
Post Sales Support and Perks
Education on Flowers and Decoration
Gift reminder service Holiday specials Everyday celebrations suggestions Special occasion suggestions
Gift guru Favorite gifts Gift frequency Gift impossible Gift baskets Corporate gift services
Ideas and Information
Post-Sales Support
Product price Product picture Product description Delivery information Delivery availability
Gizmo fully-animated greeting cards
Physical cards in gifts
Order receipt email eQ&A online customer
service FAQ Customer service inquiry
form
Perks
Miles earned with flower purchases
Free gifts Discounts at AOL &
BN with flower purchases
Member specials
“Care and handling” “Do it yourself”
Floral ideas Garden ideas Home ideas Gift ideas Gourmet ideas Store locator Recommendations by budget Best sellers
Evaluation of Alternatives
Gift Recommendations
Shopping basket E commerce transaction Special shopping features
– Delivery outside U.S.– 1-800-lasfloras.com
On-line Product Offering
In-store customer service
Customer servifce on toll-free number
Select card in-store Select card via phone
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Supporting Slide 3-D:
On-line and Off-line Integration for the 1-800-FLOWERS Resource System
Online Gift Center
Online Gift Center
Integrated Partner Offers
Integrated Partner Offers
Broad Assortment
of Gifts
Broad Assortment
of Gifts
Customer Service
Customer Service
AOLAOL MSNMSN
SNAPSNAP
Wide Reach to Customers
Wide Reach to Customers
Widespread, Easy
Access
Widespread, Easy
Access
Multiple Contact Points
Multiple Contact Points
Popular Web Site
Popular Web Site
High Quality of Flowers
High Quality of Flowers
TechnologyTechnologyStrong Brand
NameStrong Brand
Name
Strong Distribution
Network
Strong Distribution
Network
TelephoneTelephone
On-lineOn-line
Franchise
Stores
Franchise
Stores
CatalogCatalog
StarmediaStarmedia
Gift Recommend-
ations
Gift Recommend-
ations
Address BookAddress Book
Gift ReminderGift Reminder
Garden WorksGarden Works
Plow & HearthPlow & Hearth
Great FoodsGreat Foods
= On-line Activities & Assets
Customer Service Centers
Customer Service Centers
3,000 Affiliates3,000 Affiliates
Personalization Capabilities
Personalization Capabilities
Rich ContentRich Content
Third Party Contractors
Third Party Contractors
StoresStores
BloomNet Network
BloomNet Network
Fulfillment Center
Fulfillment Center
= Off-line Activities & Assets
Integrated on-line off-line systems
Integrated on-line off-line
systems
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Supporting Slide 3-E: 1-800-FLOWERS Partnerships
American Airlines® Advantage®, Delta Airlines SkyMiles®, United Airlines Mileage Plus
– Earn frequent flyer miles with 1-800-FLOWERS.com purchases
MCI Worldcom
– Receive 1-800-FLOWERS.com gift certificates with long distance sign-up
– Receive 10% off every 1-800-FLOWERS.com purchase with MCI WorldCom membership
America Online
– First agreement signed in 1994
– Exclusive marketer of fresh-cut flowers across key AOL brands until 2003
– One-year exclusive agreement to market gardening products commencing Nov. 1999
Microsoft Networks
– Premier floral partner and anchor in the MSN Home and Garden Department
– Products, advertising and links featured on MSN Shopping Channel
Snap.com
– One of the 45 premier merchants in Snap shopping service (on-line e-superstore)
– Anchor tenant in Snap.Com Flower Shop
– To be spotlighted in select Snap.com on-air promotions, scheduled to run on the NBC Television Network during the Valentine’s Day and Mother’s Day periods
Source: 1-800-FLOWERS.com website, WR Hambrecht & Co., TheStandard.com. Hoover’s Online
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Supporting Slide 3-E : 1-800-FLOWERS Partnerships (Cont.)
Excite@Home
– Markets flowers and other gifts through Excite.com and webcrawler.com web sites
– Products, advertisments and links featured in the Excite Shopping Channel
– Entered second year of marketing relationship in October 1999
Yahoo! Inc.
– Will run banner advertisements throughout the Yahoo! Network, with additional presence in shopping area
StarMedia Network
– Developing Spanish and Portuguese language versions of 1-800-FLOWERS.com web site
People PC
– Signed one year agreement to become key floral and gift-provider for PeoplePC commencing October 1999
Zapa.com
– Offers selection of online greeting cards on 1-800-FLOWERS.com web site
– Greeting cards never deleted by Zapa.com
– Users will be able to personalize greetings with their own photos, clip-art or other multi-media creations
Sears, Roebuck and Company
– Licensing relationship which enables Sears customers to use their store charge cards when shopping with 1-800-FLOWERS.com
Source: 1-800-FLOWERS.com website, WR Hambrecht & Co., TheStandard.com. Hoover’s Online
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Supporting Slide 3-F:
1-800-Flowers Activity System
BothOn-line Off-line
Key
Note:Source:
Broad Product LineBroad Product Line
Strategic AlliancesStrategic Alliances
Online Gift CenterOnline Gift Center
Multiple Customer Contacts
Multiple Customer Contacts
Nationwide Presence
Nationwide Presence
BloomNet NetworkBloomNet Network
Florist Participation
Florist Participation
Company Off-Line Stores
Company Off-Line Stores
Company Franchise Stores
Company Franchise Stores
Introduction of New Product
Categories
Introduction of New Product
Categories
Electronic Greeting Cards
Electronic Greeting Cards
Gift Recommendations
Gift Recommendations
Gift Reminder Program
Gift Reminder Program
Address BookAddress Book
BNBN
AOLAOL
Affiliate ProgramsAffiliate Programs
On-LineOn-Line
In-StoreIn-Store
TelephoneTelephone
MSNMSN
Alliance With
Distribution Carrier
Alliance With
Distribution Carrier
Partnership With
Associated Product Lines
Partnership With
Associated Product Lines
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Supporting Slide 3-G: 1-800-FLOWERS Value System
Online Gift Center
Online Gift Center
Product Partnerships
Product Partnerships
Broad Assortment
of Gifts
Broad Assortment
of Gifts
Reasonable Prices
Reasonable Prices
AOLAOL MSNMSN
SNAPSNAP
Media Partnerships
Media Partnerships
Widespread, Easy
Access
Widespread, Easy
Access
Multiple Contact Points
Multiple Contact Points
Brand NameBrand Name
Fresh Flowers
Fresh Flowers
LogisticsLogistics Bloomnet Network
Bloomnet Network
SourcingSourcing
LogisticsLogistics
TelephoneTelephone
OnlineOnline
StoresStores
AffiliatesAffiliates
StarmediaStarmedia
Gift Recommend-
ations
Gift Recommend-
ations
Address BookAddress Book
Gift ReminderGift Reminder
Garden
Works
Garden
Works
Plow & Hearth
Plow & Hearth
Great Foods
Great Foods
= Actions
= Capabilities
= Core Benefits
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Supporting Slide 3-H: 1-800-FLOWERS Value System
Online Gift Center
Online Gift Center
Product Partnerships
Product Partnerships
Broad Assortment
of Gifts
Broad Assortment
of Gifts
Reasonable Prices
Reasonable Prices
AOLAOL MSNMSN
SNAPSNAP
Media Partnerships
Media Partnerships
Widespread, Easy
Access
Widespread, Easy
Access
Multiple Contact Points
Multiple Contact Points
Brand NameBrand Name
Fresh Flowers
Fresh Flowers
LogisticsLogistics Bloomnet Network
Bloomnet Network
SourcingSourcing
LogisticsLogistics
TelephoneTelephone
OnlineOnline
StoresStores
AffiliatesAffiliates
StarmediaStarmedia
Gift Recommend-
ations
Gift Recommend-
ations
Address BookAddress Book
Gift ReminderGift Reminder
Garden WorksGarden Works
Plow & HearthPlow & Hearth
Great FoodsGreat Foods
= Activities & assets
= Capabilities
= Core Benefits
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Point-Counterpoint
Focus on Competencies Focus on Resource Systems
Organizations can lose focus by not isolatingthe few key capabilities that differentially lead tocompetitive advantage
Exceptional competencies provide competitoradvantage since most activities are the “price ofentry” into a particular on-line market
Isolation of handful of key competencies leadsto ignoring other key success factors
It is the combination of capabilities - notcapabilities in isolation that provides competitiveadvantage
Supporting Slide 3-I:
Point-Counterpoint: Competencies Vs. Resource Systems
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Table 3-2: Alternative Shareholder Value Models (Company and
User Derived)Company and User Derived
Alternative Models Metamarket Switchboard
Auctions
(Traditional & Reverse) Category Switchboard
Description Hub for many buyers and
sellers; multiple categories Competitive bid hub for
buyers and sellers Aggregates brands in
product category
Examples
BabyCenter.com VerticalNet.com
Ebay Amazon Freemarket
Chemdex PlanetRX
Revenue Model
Transactions Product sales Advertising
Transactions Transactions Advertising Product sales
Value Source
Perceived value added ser-vices
Brand name credibility
% of Transactions Perceived value-added services
Brand name credibility
Key Success Factors
Build buyer database Build seller database Value-added services
Build buyer database Build seller base Credible “hub” brand Efficient back-office support
Build brand Critical mass of buyers
and sellers
Key Threat Factors
Alternative switchboard emerges
Niche switchboard emerges Fundamental shift in care
technologies
Alternative auction Niche auctions Price of switchboard
offering equal to auction Value-added services
differentiate competitors
Emergence of metamaket
Niche category switch-board
Brand name strength of market leaders
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Table 3-3: Alternative Shareholder Value Models (Company Derived)
Company DerivedAlternative
Models BestInformation
WidestAssortment
Lowest PricesBroadest User
NetworkBest
ExperienceMost
Personalized
Description
Timely, highvalue-added in-formation
Widest assort-ment within thecategory
Lowest priceswithin category
Aggregation ofusers aroundstandard
Highest qualitymerchandise asperceived by tar-get customers
Highest level ofcustomization
Examples
Forrester Zagat NYTimes Jupiter.com
ArtistDirect.com Secondspn.com
Buy.com Lowestfares.com
ICQ MP3 Mercasa Accompany
FAO Schwatz.com Ashford.com
Reflect.com
RevenueModel
Product Sales Subscriptions
Product sales Product sales Varied Product sales Product sales
Value Source
Premium pricingbased on per-ception of bestinformation
Selective pre-mium pricing
Unclear Users drive traffic Standard
emerges Price premium
follows
Level of Luxury Premium drives
prices
Level of customi-zation drivespremium pricing
Key SuccessFactors
Timeliness of in-formation
Perceived qualityof information
Reduce uncer-tainty in offering
Quality of infor-mation andvalue-addedservices
Operational ex-cellence
Supply-chainmanagement
Establish stan-dard
Grow user net-work
Network eco-nomics
Ability to spotsymbolic brands
Ability to judgequantity
Deep CustomerKnowledge
Ability to “Mine”Customer Data-base
Key ThreatFactors
Customers do notperceive suffi-cient gap in time-liness with ge-neric offerings
Competitorsmatch marketleaders
Cost of “fresh-ness” becomesprohibitive
Specializationwithin the cate-gory
Emergence ofdominant brands
Shopbots Lack of profit im-
perative Shifting investor
confidence Re-engineer total
process not price Niche markets
Alternate standardemerges
Technology shift Backward or for-
ward integrationof complemen-tary players
Subniche marketsemerge by cate-gory
Symbolic brandloses appeal
Technology ad-vanced lead to“me-to” products
Customers wantscontrol of per-sonalization
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Exhibit 3-6: Revenue Growth Choices: 1-800-flowers
New
Existing
PR
OD
UC
TS
Existing New Existing New
Plans to branch into a wide variety of product categories
GardenworksGardenworks
Greatfoods.comGreatfoods.com
Home DecorHome DecorPlow & HearthPlow & Hearth
ON-LINE MARKETS OFF-LINE MARKETS
PlantsPlants
Gourmet TreatsGourmet Treats
Greeting CardsGreeting Cards
Corporate Gift Services
Corporate Gift Services
In-Store SeminarsIn-Store Seminars
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Point-Counterpoint
Build Profit Build User Base
Basic financial rules will eventually apply Cash flow drives shareholder value Shareholders will become frustrated as time
passes
Standards will ultimately dictate success Standards require huge investments in building
a customer base Once customer base dominates other firms will
concede and eventually large margins will beavailable
Supporting Slide 3-J:
Point-Counterpoint: Does Profit Matter? Build Profit Or Build User Base?
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Exhibit 3-7: Sawhney and Kaplan — Classification of B-to-B Models
VERTICAL HUBS
Pa
pe
rP
ap
er
Ch
em
ica
lsC
he
mic
als
Pla
stic
sP
las
tics
Ste
el
Ste
el
FUNCTIONAL HUBS
Logistics ManagementLogistics Management
Media BuyingMedia Buying
AdvertisingAdvertising
Energy ManagementEnergy Management
Source: Adopted from Business 2.0, September 1999, p.88
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SOURCES OF CONTENT ORIGINATION
Table 3-4: RJS Model Summary
FOCUS OF STRATEGY
Single Brand Multiple Brands
Supply-Side
Demand-Side
Hybrid Integrator(Cisco.com)
Hybrid Aggregator(Amazon.com)
Forward-Integrated Producer
(Wal-Mart.com)
Supply-Side Aggregator
(Surplusdirect.com)
Demand-Side Aggregator
(Accompany.com)
Backward Integrated User
(Dellonline.com) - B2B
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Table 3-5: Implications of “Pure Play” Business Approaches
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Exhibit 3-8: Schwab Egg Diagram
Schwab Learning Center Live Events Principles of Investing Understanding Market Cycles “Did You Know” Q&A
Schwab Signature Services
Schwab AdvisorSource Options Service Global Investing Service
Online chat with Customer Service Representatives
Customer Service via phone Customer Service via email Customer Service at Branch My Watch List
Margin Loans Money Transfers Automatic Investing Options Service After Hours Trading Account Protection Bill Payment
Overall General Goal
Planner Investor Profile Sample
Investment PlansRetirement Retirement
Planner IRA Analyzer
Product Offering
On-Line Investment Process
Get educated about
investing Plan
investments
Decide on Investment
Perform Investment
Post Investment
Support
Perform Research
Estate Estate Tax and
Probate Calculator Alternatives ComparisonCollege College PlannerTax Tax Strategies IRS Withholding
Calculator
Overall Quotes and Charts Analyst CenterStocks and Options Stock AnalyzerBonds and Treasuries Schwab BondSource
ServicesCDs and Money Markets SchwabOne
Annuities Schwab Select
AnnuityLife Insurance Insurance Needs
Calculator
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Exhibit 3-9: Schwab Resource System
Optimize Staff in
Branches
Optimize Staff in
Branches
Lower PricesLower Prices
Train IT Staff
Train IT Staff
24x7 Access
24x7 Access
Media General
Media General
S&PS&P
Hoovers
Hoovers
PhonePhone
BranchBranch
OnlineOnline
Charge For Value
Added Services
Charge For Value
Added Services
Provide Lower
Commission for Frequent
Traders
Provide Lower
Commission for Frequent
Traders
Innovative Products
Innovative Products
Center of Knowledge and
Innovation
Center of Knowledge and
Innovation
Investment in R&D
Investment in R&D
Cutting Edge Technology
Cutting Edge Technology Investment in ITInvestment in IT System ReliabilitySystem Reliability Multiple Points of
Access
Multiple Points of Access
Hire IT Staff
Hire IT Staff
Competitive Commission Rates
Competitive Commission Rates
Streamlined Operations
Streamlined Operations
Learning
Center
Learning
Center
= Resources
= Capabilities
= Core Benefits
Superior Service
Superior Service
Partnerships with Content Providers
Partnerships with Content Providers
Invest in CSR Trainin
g
Invest in CSR Trainin
g
Align CSR Compensation
with Quality of Service
Align CSR Compensation
with Quality of Service
Customer ServiceCustomer Service
OnesourceOnesource
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Exhibit 3-10: Schwab Resource System
= Company needs to outsource or partner
= Company can perform in-house
Optimize Staff in
Branches
Optimize Staff in
Branches
Lower PricesLower Prices
Train IT Staff
Train IT Staff
Capable IT StaffCapable IT Staff
24x7 Access
24x7 Access
Media Genera
l
Media Genera
l
S&PS&P
Hoovers
Hoovers
PhonePhone
BranchBranch
OnlineOnline
Charge For Value
Added Services
Charge For Value
Added Services
Provide Lower
Commission for Frequent
Traders
Provide Lower
Commission for Frequent
Traders
Innovative
Products
Innovative
Products
Center of Knowledge and
Innovation
Center of Knowledge and
Innovation
Investment in R&D
Investment in R&D
Cutting Edge Technology
Cutting Edge Technology
Investmentin IT
Investmentin IT
System Reliability
System Reliability
Multiple Points of Access
Multiple Points of Access
Hire IT Staff
Hire IT Staff
Competitive Commission
Rates
Competitive Commission
Rates
Streamlined Operations
Streamlined Operations
Learning
Center
Learning
Center
Superior Service
Superior Service
Partnerships with Content
Providers
Partnerships with Content
Providers
Invest in CSR Trainin
g
Invest in CSR Trainin
g
Align CSR Compensation
with Quality of Service
Align CSR Compensation
with Quality of Service
Well-Trained CSRs
Well-Trained CSRs
OnesourceOnesource
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Downsized branch staff
Downsized branch staff
High quality Investment Information
High quality Investment Information
Innovative productsInnovative products
Low priceLow price
Large, well trained sales force
Large, well trained sales force
Technology LeadershipTechnology Leadership
Supporting Slide 3-K:Schwab Activity System
Superior serviceSuperior service
Investment in ITInvestment in IT
24 x 7 Customer service
24 x 7 Customer service
Exceptional team of engineers
Exceptional team of engineers
In-house technology
development
In-house technology
development
Large investment in R&D
Large investment in R&D
System able to handle large
volume
System able to handle large
volume
Increase in trade
volume
Increase in trade
volume
Increase in non-trade revenue
Increase in non-trade revenue
Multiple points of access
Multiple points of access
On-lineOn-line PhonePhone BranchBranch
Comprehensive information
Comprehensive information
Partnerships with
content providers
Partnerships with
content providers
Hoovers Online
Hoovers Online
S&P Comstock
S&P Comstock
Media General
Media General
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Supporting Slide 3-L:
Schwab Value Proposition
“Use technology to offer innovative products and superior service at lower prices to investors
unwilling to pay for investment advice”
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Table 3-6: Partners Give/Get Matrix
Partners Benefits to Partner: “Give” Benefits to Schwab: “Get”Content Partners(e.g. Hoovers,S&P, MediaGeneral, H&Q)
Partners receive revenues from Schwab Exposure and branding on a major site Click-throughs
Best-in-class content essential for Schwab todifferentiate itself from other discount brokers
OnesourcePartners: MutualFund Managers
Access to large flow of business from Schwabcustomers
Significant reduction in marketing costs
Cement the relationship with the customer byacting as valuable “switchboard”
Schwab receives transaction fees from funds
Web SitePartners:Razorfish
Opportunity to work with high profile client On-going fee based relationship
Access to highly creative site designers Consistent customer experience and look &
feel Frees up internal resource
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Exhibit 3-11: Schwab Revenue Growth Choices
New
Existing
PR
OD
UC
TS
Existing New Existing New
Advanced Software ToolsAdvanced Software Tools
After-hours tradingAfter-hours tradingInternational ExpansionInternational Expansion
ON-LINE MARKETS OFF-LINE MARKETS
International ExpansionInternational Expansion
Learning CenterLearning CenterIn-Branch SeminarsIn-Branch Seminars
New Online Investment BankNew Online Investment Bank
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Point-Counterpoint
Pure Dot-com Start Brick-and-Mortar Start
Not constrained by Old-Economy culture Not constrained by physical world assets that
have no value in digital world Can operate fast New rules apply Great examples – Amazon, Yahoo
Old-economy business culture does apply Have assets -- brand, channels, people -- that
have tremendous value in digital world Can operate “right” Old financial rules supercede new rules Great examples -- GE.com, Dellonline.com
Supporting Slide 3-M: Point-Counterpoint: Who Would You Rather
Be? A Dot-Com Or Brick-And-Mortar Business?
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Supporting Slide 3-N : Business Model Choices Must Be Consistent With Sources of Competitive Advantage
Content Production
eBusiness Interface
Content Utilization
Content Production
eBusiness Interface
Content Utilization
Content Production
eBusiness Interface
Content Utilization
Content Production
eBusiness Interface
Content Utilization
Content ProductionContent ProductionContent ProductionContent ProductionContent Production
Content UtilizationContent UtilizationContent UtilizationContent UtilizationContent Utilization
Business Model Options (Not Mutually Exclusive)
Forward-Integrated Producer
Backward-Integrated
User
Supply Aggregator
Demand Aggregator