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CHAPTER 2 THEORITICAL BASIS
2.1 Basic Theory
2.1.1 Definition of System
Bentley & Whitten (2007:6) define that a system is a group of interrelated components that function together to achieve a desired result. whereas Brien (2001) define that system is a group of interrelated components working together toward a common goal by accepting inputs and producing outputs in an organized transformation process.
Both said similar things about how system are component that work together, but Brien detailed it some more about how they need input for producing output.
2.1.2 Information System
According to Bentley & Whitten (2007:6), Information System is an arrangement of people, data, processes, and information technology (combination of hardware, software, and telecommunications technology) that interact to collect, processes, store, and provide as output the information needed to support an organization
2.1.3 Definition of Internet
Internet is a worldwide computer network that connects hundreds of thousands smaller networks. These networks link educational, commercial, nonprofit, and military entities, as well as individuals (Williams & Sawyer, 2010).
Internet is a global collection of networks that use the same networking protocol—TCP/IP (Satzinger, Jackson, & Burd, 2005).
2.2 Business Terminology
2.2.1 Definition of Technopreneur
According to Jusoh & Halim (2006), The term technopreneurs arose from within Singapore culture to describe entrepreneurs who combine entrepreneurial skills with technology. Various literatures use the term “technology-based entrepreneurs”, “technical entrepreneurs”, “high technology entrepreneurs” or even “high tech new ventures” to describe new business that combine entrepreneurial skills and technology. So technology-based entrepreneur is a process and formation of a new business that involves technology and these “technopreneurs” use technological innovations and translate such technology into successful products or services.
Jusoh & Halim also give more explanation by giving comparison between entrepreneur and technopreneur which they said, By looking at the economic theory, entrepreneurial activity concerns with the combination of factors of production such as land, labour, and capital to produce goods or services and entrepreneurs are the agents who combine the other resources with a mission to create a successful business venture. They are also the risk-bearer as the business venture has no guarantee of profit. Various literatures have indicated that entrepreneurs posses the characteristics such as nnovative and imaginative. In Malaysia, the term technopreneurs refer to the technical entrepreneurs or technology-based entrepreneurs who combine the factors of production and their entrepreneurial skills with technology to set up new business By looking at the objectives of the new Flagship Application as a whole, the main targets are the technology-based entrepreneurs, ICT SMEs as well as start up companies. These communities will be able to help build a critical mass of feasible ideas and business plans in order to develop a number of excellent companies. In this regard, it is worth to mention that Malaysian technopreneurs are the entrepreneurs who engage in the ICT, multimedia, biotechnologies, bioinformatics, and other high tech industries. In addition to that, Malaysian technopreneurs are also engage in wireless and mobility solutions as well as advanced software businesses.
2.2.2 Definition of Business Plan
Based on Moore, Palich, & Petty (2006:117), there is no correct definition for a business plan however he said “in general, a document that outlines the basic idea underlying a business and describes related startup considerations”. He also add that business plan is entrepreneur’s game plan; it crystallizes the dreams and hopes that motivate an entrepreneur to take the startup plunge, the business plan should lay out your basic idea for the venture include description of where you are now, where you want to go, and how you intend to get there. Business plan is used primarily in two ways:
1. To provide a statement of goals and strategies for use by individuals within the firm.
2. To aid in the development of relationships with outsiders (Customer, Investors, and Suppliers) who could help the company achieve its goals.
2.2.3 Definition of Business Model
According to Haaker, Faber, & Bouwman (2006), business model is “A business model describes the way a company or network of companies aims to make money and create customer value”.
Yet according to Osterwalder & Pigneur (2010:14), business model is “A business model describes the rationale of how an organization creates, delivers, and captures value”, they also believe a business model can best be described through nine basic building blocks that show the logic of how a company intends to make money and using those nine basic building blocks, we can form a tool to help visualizing business model which is “Business Model Canvas”. They also said that the nine blocks cover the four main areas of a business: customers, offer, infrastructure, and financial viability, so business model is like a blueprint for a strategy to be implemented through organizational structures, processes, and systems.
2.2.4 Definition of Business Model Canvas
According to Osterwalder & Pigneur (2010:8), A business canvas is ‘A shared language for describing, visualizing, assessing, and changing business models. The nine business model Building Blocks form the basis for a handy tool, which we call the Business Model Canvas, the nine business model Building Blocks are:
a. Customer Segments: The Customer Segments Building Block defines the different groups of people or organizations an enterprise aims to reach and serve. Customers comprise the heart of any business model. Without (profitable) customers, no company can survive for long.
b. Value Propositions: The Value Propositions Building Block describes the bundle of products and services that create value for a specific Customer Segment. The Value Proposition is the reason why customers turn to one company over another. It solves a customer problem or satisfies a customer need.
c. Channels: The Channels Building Block describes how a company communicates with and reaches its Customer Segments to deliver a Value Proposition Communication, distribution, and sales Channels comprise a company's interface with customers.
d. Customer Relationships: The Customer Relationships Building Block describes the types of relationships a company establishes with specific Customer Segments A company should clarify the type of relationship it wants to establish with each Customer Segment. Relationships can range from personal to automated.
e. Revenue Streams: The Revenue Streams Building Block represents the cash a company generates from each Customer Segment (costs must be subtracted from revenues to create earnings)
f. Key Resources: The Key Resources Building Block describes the most important assets required to make a business model work. Every business model requires Key Resources. These resources allow an enterprise to create and offer a Value Proposition, reach markets, maintain relationships with Customer Segments, and earn revenues.
g. Key Activities: The Key Activities Building Block describes the most important things a company must do to make its business model work Every business model calls for a number of Key Activities. These are the most important actions a company must take to operate successfully.
h. Key Partnerships: The Key Partnerships Building Block describes the network of suppliers and partners that make the business model work. Companies forge partnerships for many reasons, and partnerships are becoming a cornerstone of many business models. Companies create alliances to optimize their business models, reduce risk, or acquire resources.
i. Cost Structure: The Cost Structure describes all costs incurred to operate a business model. This building block describes the most important costs incurred while operating under a particular business model. Creating and delivering value, maintaining Customer Relationships, and generating revenue all incur costs. Such costs can be calculated relatively easily after defining Key Resources, Key Activities, and Key Partnerships.
Figure 2.1 The Business Model Canvas
Source: (Osterwalder & Pigneur, 2010:44)
Figure 2.2 Example of Filled Business Model Canvas
Source: (Osterwalder & Pigneur, 2010:46)
2.2.5 Definition of SWOT Analysis
Osterwalder & Pigneur (2010) explain that SWOT analysis is used to analyze an organization’s strengths and weaknesses and identify potential opportunities and threats, they add: “SWOT asks four big, simple questions. The first two—what are your organization’s strength and weaknesses?—assess your organization internally. The second two—what opportunities does your organization have and what potential threats does it face?—assess your organization’s position within its environment.”
According to Simoneaux & Stroud (2011), a SWOT analysis is an important aspect of strategic business planning and should always be performed in conjunction with the initial creation of a company’s business plan, SWOT analysis is also an effective tool for managing change, determining strategic direction, and setting realistic goals and objectives. The SWOT analysis allows a company to assess where it is today and where it wants to go, which are integral components of a living, breathing business plan.
a. Strength and Weakness: The “internal” review to determine strengths and weaknesses consists of an honest assessment of the company’s structure, capabilities, resources, and skills. The “internal” review to determine strengths and weaknesses consists of an honest assessment of the company’s structure, capabilities, resources, and skills.
b. Opportunities and Threats: An extrenal review should be conducted to identify opportunities and threats, which are typically created by "external" forces. They can be attributed to such things as political climate, economic shifts, laws and regulations, technology, industry trends, target markets, distribution channels, competition, etc. A critical part of the external environmental scan is to identify and recognize not just the current opportunities and threats but also potential future considerations. Opportunities typically represent areas in which the company could grow or increase profitability or efficiency. Threats are typically comprised of external forces that could cause significant stress or economic downturn to a business.
Figure 2.3 Connection Between SWOT Analysis and Business Model Canvas
Source: (Osterwalder & Pigneur, 2010:216)
2.3 Web Terminology
2.3.1 Social Media
According to Gould (2013), Social media are web based tools for interaction that, in addition to conversation, allow users to share content such as photos,videos and links to resources.
Kaplan & Haenlein (2010:61) explain that Social Media is a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, and that allow the creation and exchange of User Generated Content. There are two keys elements of Social Media which are media research (social presence, media richness) and social processes (self-presentation, self-disclosure).
a. Social Presence: Social presence is influenced by the intimacy (interpersonal vs.mediated) and immediacy (asynchronous vs. synchronous) of themedium, and can be expected to be lower for mediated (e.g., telephone conversation) than interpersonal (e.g., face-to-face discussion) and for asynchronous (e.g., e-mail) than synchronous (e.g., live chat) communications. The higher the social presence, the larger the social influence that the communication partners have on each other’s behavior.
b. Media Richness: Media richness theory is based on the assumption that the goal of any communication is the resolution of ambiguity and the reduction of uncertainty. It states that media differ in the degree of richness they possess–—that is, the amount of information they allow to be transmitted in a given time interval–—and that therefore some media are more effective than others in resolving ambiguity and uncertainty.
c. Self-Presentation: With respect to the social dimension of Social Media, the concept of self-presentation states that in any type of social interaction people have the desire to control the impressions other people form of them On the one hand, this is done with the objective of influencing others to gain rewards (e.g., make a positive impression on your future in-laws); on the other hand, it is driven by a wish to create an image that is consistent with one’s personal identity (e.g., wearing a fashionable outfit in order to be perceived as young and trendy).
d. Self-Disclosure: The key reason why people decide to create a personal webpage is, for example, the wish to present themselves in cyberspace. Usually, such a presentation is done through self-disclosure; that is, the conscious or unconscious revelation of personal information (e.g., thoughts, feelings, likes, dislikes) that is consistent with the image one would like to give. Self-disclosure is a critical step in the development of close relationships (e.g.,during dating)
Applied to the context of Social Media,we assume that first classification can be made based on the richness of the medium and the degree of social presence it allows, second classification can be made based on the degree of self-disclosure it
requires and the type of self-presentation it allows, combining both dimensions leads to a classification of Social Media as seen in the below.
Figure 2.4 Classification of Social Media by social presence/media richness and self-presentation/self-disclosure
Source: (Kaplan & Haenlein, 2010:62)
2.4 System Analysis & Design
2.4.1 Activity Diagram
Based on Satzinger, Jackson, and Burd (2004:144), Activity Diagram is a type of workflow diagram that describes the user activities and their sequential flow.
2.4.2 Event Table
Event table is a catalog of use cases that lists events in rows and key pieces of information about each event in columns (Satzinger, Jackson, & Burd, Jackson, & Burd, 2004:174). Event table consists of event, trigger, source, use case, response, destination.
2.4.3 Entity Relationship Diagram (ERD)
Based on Bentley & Whitten (2007), a data model utilizing several notations to depict data in terms of the entities and relationships described by that data. Contain three components/symbols that underline all data models:
- Entity: a class of persons, places, objects, events, or concepts about which we need to capture and store data.
- Attribute: a descriptive property a characteristic of an entity. Synonyms include element, property, and field.
- Relationship: a natural business association between one or more entities.
2.4.4 Use Case Diagram
Use case diagram was representing the interaction between system, different kind of user, and different kind of action
According to Satzinger, Jackson, and Burd (2005:213), Use Case Diagram is a diagram showing the various user roles and the way those users interact with the system. Whereas based on Bentley & Whitten (2007:188), Use Case is a diagram that depicts the interactions between the system and external systems and users. In other words, it graphically describes who will use the system and in what ways the user expects to interact with the system. Use Case Diagran has two components/symbols which is Actors and Relationships.