Digital Business 1

Course Logistics

  • Course: "Digital Business" (Schmalkalden University of Applied Sciences)

  • Lecturer: Prof. Dr. A. N. Richter

  • Semester start: 07 Apr 2025

  • Synchronous lecture slot: Monday 10:15 – 11:45 (weekly, online via StudIP/BigBlueButton)

  • Guided self-study slot: Monday 12:15 – 13:45 (weekly, online)

  • Cancelled sessions: **21.04 (Easter Monday), **09.06 (Whit Monday), **16.06 (Schmalympics)

Evaluation & Workload

  • Written examination: 100\% of grade

    • Optional Workbook bonus: up to +3 pts

  • Total workload: 150\,h

    • Synchronous: 60\,h (lecture attendance)

    • Asynchronous: 90\,h

    • Literature prep: 50\,h

    • Follow-up: 20\,h

    • Exam prep: 20\,h

Credits & Module Status

  • 5 ECTS credit points

  • Weighting:

    • Compulsory-elective in Business & Economics, Economics, Business Psychology, Business Administration

    • Compulsory in International Business & Economics

Learning Resources & Access

  • University Library: EBSCO Business Source Ultimate, Statista, Springer Nature

  • Key URLs
    • Library (DE): https://www.hs-schmalkalden.de/…bibliothek
    • Library (EN): https://www.hs-schmalkalden.de/en/…library
    • EBSCO entry: https://dbis.ur.de/dbinfo/detail.php?…101885
    • Statista entry: https://dbis.ur.de/dbinfo/detail.php?…9808
    • VPN client setup: hs-schmalkalden.de/…/vpn

Course Aims & Methods

  • Part I: Foundations of digital markets & businesses

  • Part II: Deep-dive into digital business models

  • Pedagogy: lectures, exercises, self-study, case studies (problem-based learning)

Digital Business & Platform Economy – Key Ideas

“Software is eating the world” (Andreessen, 2011)

  • Software firms poised to absorb vast economic sectors; moves economy from physical to information-centric.

Digital Society Snapshots

  • Media covers (NY Times, Time, Atlantic) illustrate ubiquity of TikTok, Netflix, Starlink, Yahoo Finance, Wikipedia → evidence of pervasive digital consumption.

Data as the New Oil (Clive Humby)

  • 20^{\text{th}} c.: Oil drove industrial growth.

  • 21^{\text{st}} c.: Information & communication tech driven by data; data extraction, refinement & distribution now parallel petroleum value chain.

Internet Adoption (Demand-Side)

  • Continuous rise in world users 2005\rightarrow2022 (billions) → expanding addressable market for digital platforms.

Technology as Enabler

  • Disruption magnitude ≈ First Industrial Revolution; however, principle-driven rather than tool-driven.

  • Overarching principles:

    • Networking (IoT, vertical/horizontal/lateral connections)

    • Mobility (location-independent work, virtual orgs)

    • Virtuality (digital twins, cloud, social networks)

    • Platform economy (multi-sided markets)

  • Exponential performance ↗, cost ↘ → shorter innovation cycles.

  • Historical lineage visualised via photos: hand-craft glasswork (1932), Ford Model-T assembly line (1913), DDR welding robot (1983) showing phases of mechanisation → automation → digitisation.

Fourth Industrial Revolution – Core Technologies (crowd responses)

  • AI & Machine Learning, Big Data/Analytics, IoT, 5G, Cloud & Edge Computing, Blockchain/Cryptocurrency, Robotics & Automation, VR/AR, Quantum Computing, 3-D Printing, Biotechnology & Genetic Engineering, Renewable/Green Energy, Cyber-security, Web3, Digital Platforms.

AI-Driven Innovation Examples

  • Customer Service: AI chatbots (e.g., ChatGPT) enable 24/7 support, cost reduction; monetised via AI-as-a-Service (AIaaS) subscription.

  • Healthcare: AI image analysis for early cancer detection; cloud-based “pay-per-use” models democratise access for hospitals.

Invention vs Innovation (contrast)

  • Invention: first-time creation; outcome = prototype; high uncertainty; e.g. first telephone.

  • Innovation: commercialisation/improvement; outcome = market-ready product; lower uncertainty; e.g. touchscreen smartphone.

Societal Transformation

  • Shift from knowledge → information → digitalisation (Clement et al., 2019; Kollmann 2013)

  • Information-society dimensions (Wirtz): Digital Collaboration, E-Commerce, Communication, Business, Education, Entertainment, etc.

Defining Digital Business

  • Multiple scholarly/industry definitions (1997–2017) stress technology-mediated exchanges.

  • Working definition (Wirtz 2021):
    “Digital business is the initiation, partial or full support, transaction, and maintenance of service exchange processes between economic partners through electronic networks.”

  • Key terms:
    • Service exchange: transfer of tangible/intangible value for consideration.
    • Electronic networks: aggregation of physical & mobile connections conveying digital data.

Actors & Interaction Patterns (Internet-Economy Model)

  • Supply-side provider ↔ digital market place ↔ customer/user.

  • Intermediary roles: Agents/Aggregators (both sides).

  • Support functions: search, bundling, payment, creditworthiness, logistics, security, customer service.

Platform Business Fundamentals

  • Deloitte: platform = business model facilitating large-scale participant interactions.

  • Parker et al. 2016: value-creating interactions, open participative infrastructure, governance rules, match-making, multi-sided exchange.

  • Non-platform contrast: static, one-way info, no multi-user intermediation.

Industry Platform Examples (Parker et al.)

  • Transportation: Uber, Waze, BlaBlaCar.

  • Retail: Amazon, Alibaba.

  • Finance: Bitcoin, Lending Club, Kickstarter.

  • Others: LinkedIn (communication), Philips FlavorPrint (consumer goods), John Deere (Farm Mgmt), Nest (energy/IoT).

Market Impact Indicators

  • Market-cap shift 2006\rightarrow2016: oil/energy → tech dominance (Apple \$571.4\text{ b}, Alphabet \$530.6\text{ b}, etc.).

  • Big Five 2023 (Microsoft, Apple, Meta, Amazon, Alphabet) ≈ 8\text{ trn}\,\ combined.

  • Observation: platforms externalise production assets (Uber owns no cars; Airbnb no real estate; Facebook no content; Alibaba no inventory).

Platformisation Metrics

  • Share of platform companies in Top 500 US stocks rose 40\rightarrow100 (Sparkline Capital).

  • Amazon’s internal “platform score” tracks expansion from retail core (1998) to AWS, Marketplace, Alexa, KDP (timeline chart).

Digitalisation in Germany – Corporate Perspective (Bitkom 2020)

  • Digitalisation seen as opportunity by 96\% of firms (↑ from 89\% 2018).

  • Advantages cited: broad offering, new customers, future-proofing.

  • Disadvantages: low entry barriers for rivals, price pressure, loss of direct customer contact.

  • Strategy adoption: 57\% already have a (holistic/departmental) platform strategy; large firms (500+ employees) more active than SMEs.

  • Obstacles: data protection, IT security, talent shortage, legal uncertainty; calls for EU-wide coherent rules & public funding.

  • Consensus: “No way around digital platforms” → high importance forecast for global & German economy, industry, individual firms over next 10 years.

International Outlook

  • Global Top-100 platforms (Aug 2023): total valuation ≈14.1\text{ trn}\,\
    • America dominates 80.3\% share; Asia-Pacific 15.8\%; Europe 3.4\%; Africa 0.2\%.
    • Mix of public vs private unicorns.

Digital Transformation & Disruption

  • Definition: foundational rethinking of tech, people, processes to create new value & revenue.

  • Benefits: faster processes, shorter time-to-market, cost reduction, revenue growth.

  • Disruptive Innovation (Christensen): entrants start low-end → move up-market → incumbent displacement. Steps: ignore low-end → entrant traction → up-market → mass switch.

  • Classic case: Netflix vs Blockbuster.

  • Statistic: firms face \tfrac{1}{3} chance of survival in next 5 years without transformation.

Success Factors for Digital Business

  • Business-Model Innovation (tool)
    • e.g. value proposition re-design, revenue model shifts.

  • Network Effects (Metcalfe’s Law): value proportional to n^2 of participants.

  • UI/UX Excellence: intuitive design drives adoption & stickiness.

  • Recommended videos:
    • Accenture case (business-model)
    • Network-effect explainer
    • UI design principles

Self-Study & Workbook

  • Weekly self-study slot 12:15–13:45; objective: deepen global relevance, encourage critical thinking.

  • Digital Workbook (PDF) structure:

    1. Cover page

    2. Introduction (expectations)

    3. Learning-unit sections (date, summary, tasks, reflections)

    4. Conclusion

    5. References.

  • Submission deadline: 11 Jul 2025, potential +5 bonus exam points.

Sample Self-Study Questions (Part 1)

  1. Definition & differentiation of digital vs traditional business.

  2. Platform economy as driver of digital markets.

  3. Pros/cons of digital platforms for firms & consumers.

  4. Data ≙ new oil – why?
    – Students watch two videos and compile three take-aways each.

Case-Study Prompt (Part 2)

  • Choose firm (Alibaba, Tesla, Spotify, Naspers/Prosus, or own example) → analyse success, use of AI/cloud/platform, cross-country differentiation, lessons learned.

Reflection (Part 3)

  • Personal impact of platforms, industries most likely to be disrupted, regional barriers/enablers.

References (selection used in slides)

  • Wirtz, B. W. (2021). Digital Business and Electronic Commerce.

  • Schneider, G. P. (2017). Electronic Commerce.

  • Overby & Audestad (2018). Digital Economics.

  • Bitkom Research (2020). Digitale Plattformen 2020 report.

  • Christensen, C. M. et al. (2013). Disruptive Innovation, HBR.

  • Parker, Van Alstyne, Choudary (2016). Platform Revolution.

(Additional citations provided in slides for images, URLs, and case references.)