Configuring Value for Internet Business Model and Competitive Advantage

In the network age, the source of economic value and wealth is no longer the production of material goods but the creation and manipulation of competitive Internet business models. When a new model changes the economics of an industry and is difficult to replicate, it can by itself create a strong competitive advantage. The purpose of this paper is to investigate the value configuration and competitive advantage on Internet business models. The business model analysis includes the business model primary components and emphasizes the value analysis. This analysis serves as a mean for developing and understanding of a model value configuration and how this value configuration can both create and maintain competitive advantages. >From case studies, we conclude that even though each model has a unique value configuration, the value creation configurations are based on the value chain, value shop, value network their integration or remodeling. The intermediary model value configurations, such as a brokerage, are based on the value network and value shop. The competitive advantage of the brokerage model is that the first mover appears in the market armed with a brand name, industry know-how, and impressive value-added service. The merchant model is based on the value chain and value shop. A strong brand name, a gigantic selection of titles, successful distribution operations, and customized services are the main competitive advantages for a virtual merchant. The value chain and value shop are the value configurations applied most appropriately to the manufacturer model. Brand name, professional manufacturing technology, superior quality product, direct sales system, successful physical distribution, and impressive service are the key competitive advantages of the manufacturer model. Only when firms build an Internet business model consistent with the correct value configuration can they develop and maintain a competitive advantage.