Syllabus for E106 E-Business (3,0,6) - Version 2 - Note changes! 09/27/2000

Instructor K. Pickar

Lecture 1 Introduction to the Course

The Course will be discussed including: student expectations, course philosophy, syllabus, the formation of student teams, grading etc. For example we will describe some of the business and technical problems associated with studying the Internet. It will not cover everything; it will not be correct for all time. We will take a highly participatory approach to apply the principles of business to a rapidly changing environment to attempt an understanding of the forces involved.

The course will be team based. The teams will prepare (and in some instances write) the cases, and Research Briefs. The Caltech honor code applies to encourage each member to pull his or her weight.

Lectures will be posted on the Course web site as will all student written assignments. There will be links to supplementary readings. Books on Reserve will be listed below.

As most students will have little experience in business research, there will be a supplementary, highly recommended tutorial offered by the library on how to access the rich array of resources available to Caltech students.

There will be Guest Lectures by Internet practitioners, other Caltech Professors as well as a leader from industry. Classroom activity will include lectures by the Instructor, lectures by Guests, case presentations by students and class discussion of cases.

The first Lecture will conclude with a brief history of the Internet.

Lecture 2 Some basic Microeconomics topics

This Lecture will cover some of the unique attributes of internet-based businesses and how they correlate with some well-established business economic principles.

  1. Unique internet attributes
  2. Value
  3. What is the meaning of providing value to the customer? What is the Value chain? How does it evolve?
  4. Case history: Eteamz - We will discuss the issues of how to make a business of a large affinity network. Special Guest Speaker: Brian Johnson, CEO, Eteamz
  5. First Mover advantage and Network theory
  6. When does a First Mover often dominate a market segment. What prevents late entries from thriving. The meaning of Internet time.,1151,6417,00.html

  7. At this time we will also expect Teams to have come together. Each team must choose one Case and one term project.
  8. Some references on Community: Ref Hagel and Johnson, "Net.Gain", or hand-out: Armstrong, A. J. Hagel III, "The Real Value of Online Communities", Harvard Business Review, May-June, 1996. 134-141. BW article on Communities

Lecture 3 Business Models for the Internet

The lecture will define and discuss the various types of models now used for Internet businesses. HW assignment due 10/17 Each team will present HW examples of a "living" taxonomy of business models with a click-through to show examples of each. You may use whatever sources you can find, but make sure that the examples are current. Discuss for each generic model the value it provides for the customer. Speculate (invent!) two additional models that might be possible. These models will be put into a template provided by the TA, integrated by the TA and put onto class web site. During the quarter, as you run across additional models, they will be added to create a Taxonomy of Internet Commerce.

Lecture 4 Autobytel A case of Re-intermediation.

In this case an Internet Auto sales company struggles with the plusses and minuses of working with an existing traditional network of dealers. Please read the Case and answer the following questions: 1. What is Autobytel's value proposition for Consumers? For dealers? What are the downsides of the model from the consumers and dealers perspectives? 2. What course should Autobytel do to accelerate revenue growth? How should Autobytel differentiate itself from competition? (Note October 5, 2000 at 3:30-5:00PM, there will be a library Web Research Tutorial for E106 in the Fairchild Library)

Lecture 5 Pricing Guest Lecturer Prof. Simon Wilkie

Fundamental principles of pricing with pricing failure modes discussed. Pre-reading from "Information Rules."

Lecture 6 Case

Leadership Online: Barnes & Noble vs. (A)," by P Ghemawat and B. Baird, Harvard Business School, #9-798-063, December 4, 1998. Also Reading: K&R - 6, 12. and McKinsey Quarterly articles and other articles about Amazon to be assigned or passed out.

This case illustrates the classic bricks and clicks battle.


  1. Assess Barnes and Nobles response to the disintermediation threat from Amazon. How did Amazon respond and to what effect?
  2. Who will be the online leader? Will they ever make much money selling books (as opposed to selling stock?)

Lecture 7 Scientific Publishing Lecture

Guest Lecturer Professor Richard Flagan on "clicks and bricks" for scholars i.e.scientific publishing. Reference also Kalakota and Whinston p 251-283 good introduction to the subject.

Lecture 8 Cisco Systems, Inc

Acquisition Integration for Manufacturing

  1. What are the upsides and downsides of utilizing investments and acquisitions as a source of growth
  2. From the viewpoints of the "working level" employees of Summa Four, Summa management, Summa stockholders, and Cisco, what are the potential upsides and downsides of the acquisition?
  3. Describe how you would improve Cisco’s Acquisition selection and integration process.

Supplementary reading: Chaydhury and Tabrizi, Harvard Business Review, Sept Oct 1999

Lecture 9 Response of Traditional Companies

TRW Guest Lecturer Steve Lunny

How do existing businesses cope with the effects of electronic commerce in their industries? What are the difficulties in disintermediation, in selling "factory direct". In this lecture we will describe how Corporate Strategies evolve to protect and grow old businesses.

Lecture 10 Competition on the web e-bay case

  1. Describe e-bay’s business model.
  2. How should e-bay respond to the threat from Amazon?

Lecture 11 Dell Computer Corporation

  1. How and why did the PC industry come to have such low profitability?
  2. Why has Dell been so successful?
  3. Prior to the recent efforts of competitors, how big was Dell's competitive advantage? Specifically, calculate Dell's advantage over Compaq in serving a corporate customer.
  4. How effective have Dell's competitors been in responding to the advantage? How big is Dell's remaining advantage?

Lecture 12 Business-to-Business E-commerce; Guest Lecturer: Ben Barak, TraderBen

We will present here a B2B model which did not work. We will discuss the reasons why this happened and what could be done better in the future.

References Kalakota & Whinston: ch 10.

article at

Lecture 13 Student Term Presentations 1, 2

Lecture 14 Business Models

Guest Lecturer, Bill Gross

Lecture 15 Hotmail - a case in valuation

Guest lecturer Sabeer Bhatia

  1. How would you value Hotmail at the time of this case? (See reference for some ideas)
  2. How would you value Hotmail if the company were at the same stage of development in the same competitive landscape but the capital markets reflected today's conditions?
  3. What further steps might Sabeer take to improve valuation and inhibit his dilution?

Reference: McKinsey Quarterly article Valuing dot-coms

Lecture 16 Student Term Presentations 3, 4

Lecture 17 Student Term Presentations 5, 6

Lecture 18 Summary Lecture

Presentations of student term papers should be 45 minutes apiece. For the chosen topic, what are the issues, technical, political, financial, etc. What are some of the technical and political solutions? What are some likely outcomes? After the subjects are chosen, be sure, at your initiative, to check with Instructor and TA on direction, content etc. An outline would be useful for us to critique before too much work is done.


Guest Lecturers will be here for dinner preceding their talks. Students will be invited to dine with them.

Team study

The class will be nominally divided into three person teams which are charged with the responsibility of preparing case material and other HW as well as the Term Assignments. Presentations will be made by all members of the Team.

Term Projects (do either 1 or 2)

  1. Write Research Brief.
  2. Pick a current important subject whose development will have a profound effect on web technology and/or economics. Louisa Toot ( and Hema Ramachandran ( of the Fairchild Library will provide a tutorial on info sources and methodologies for web-based research. This tutorial will be scheduled to be held during the first week of classes. Also, during the first two weeks of class, teams will be formed, Research Brief topics will be proposed and accepted by the instructor.

    This collection of research briefings will form part of the text and lecture materials for the course. In a rapidly moving environment these briefs, or white papers, will provide up-to-date information not easily accessible elsewhere. Essentially, we will write our own text! Student presentations of the material will be worked into the class sessions and will be posted on the class web site. The briefings will be 20 % of the grade

    Some possible Briefing topics include

    Local access modalities (e.g.broadband wireless)
    Future of the Internet e.g. congestion mitigation strategies, new languages, etc.
    Novel emerging Business Models
    New search engines, agents (bots), and filters
    Electronic payment systems (e.g. micropayments)
    User Verification
    Disintermediation and Reintermediation
    Internet advertising including measuring advertising effectiveness
    Novel pricing strategies for information goods
    Successful (i.e. profitable!) retailing models
    Publishing on the web (new business models)
    Music on the Web- How to make a viable business.

  3. Case Study

The group will develop a case study of either (1) an industry in which e business has the potential for playing a major role such as automobile retailing, travel services, retail banking, in-store and catalog retailing, magazine publishing, stockbrokers, etc. or (2) a firm involved in e business such as CDNow,, JCPenney, Yahoo, AOL, E*Trade, Auto-By-Tel,, etc.

The case report should have two parts: (A ) the "case part" providing the background information and the strategic issue such as the alternatives facing the firm or the potential direction that an industry might evolve with the increase in ecommerce activity and (B) the "analysis part" providing an analysis of the issue and a "solution", a recommendation for the company or a forecast for how the industry will evolve. The proposal should outline the issues you plan to address and why you selected the topic.

For the industry studies (type 1), the "case part" identifies the players in the industry, the potential evolution of industry as ecommerce begins to play a more important role, and the potential factors affecting the viability and performance of players in the industry. The "analysis part" forecasts the evolution of the industry and the winners and losers.

For the company studies (type 2), the "case part" outlines the company’s strategy (target market and offering), identify its present and potential competitors, assess its strengths and weaknesses relative to competition, the opportunities and threat affecting the company, and the potential strategic directions it might take. Data is gathered from the web and from personal interviews. The "case part" analyze the alternatives and makes a recommendation.

Class Web Site

As is appropriate for a course on web-based business, we will maintain a course Web site. The material will be password protected. All Lectures (except possibly some guest Lectures will be posted). Thus all presentations must be written following a Template to allow easy posting. A TA webmaster will be available for assistance. All PowerPoint presentations written by students to present the results of the term assignment or of HW will be web posted. Cases and some supplementary readings will still be in paper hand-out form because of copyright issues unless I can figure out a legal way to distribute these. This could be a very exciting part of the course. We will be, in effect, writing together a fresh textbook. In one year when the information is old and the course is repeated we will update it. Preferably much more frequently.


We will use E206 in Thomas which is being upgraded with a new projection system and will be enabled for internet and voice teleconferencing access. Presentations can then include live web site projection..


Despite the technology inherent in this course, this is not an extension exercise where people can learn all they need without attending class. The interactions and discussion are a vital part of the process and a part of the grade is based upon participation.

Books on Reserve,

Shapiro and Varian, "Information Rules"
Hagel and Armstrong, "net.gain", Harvard Business School Press
Evans and Wurster, "Blown to Bits", Harvard Business School Press
Ward Hanson, "Principles of internet Marketing", South-Western College Learning
Siebel and House, "Cyber Rules", Currency/Doubleday
Kalakota and Whinston, "Electronic Commerce"
Schwartz, "Digital Darwinism", Broadway Books
Cairncross, "the Death of Distance"
Tapscott, Ticoll and Lowy, "Digital Capital", Harvard Business School Press
Kosiur, "Understanding Electronic Commerce", Microsoft Press
Price, "E-Business 01 02", McGraw-Hill/Dushkin