makes the salesforce. com solution especially Thus, the Internet is having a strong attractive to small and young firms that are impact on many business sectors. In some trying to hang on to their cash. The company it is clearly creating opportunities to attract has become successful by developing a sim- customers and generate new revenues. But ple business model which provides a solu- successfully creating wealth requires that tion that is both differentiated and relatively companies identify which technologies and low cost to the longstanding problem of sales solutions can be enacted to add value. Mon- management. It is creative combinations itoring the effect of these technologies and such as this that are helping Internet compa- the changes that they stimulate will become nies develop strong new value propositions an increasingly important task for strategic There is a contrasting view, however, managers as firms adjust to the new practices the perception that enlightened applications and possibilities of the Internet-enabled digi of Internet technologies are creating value At tal economy the industry level, what may be good for a few companies has been devastating for others. That is, there are whole industries CONCLUSION that have lost value because of adopting Internet solutions The Internet and digital technologies have Consider the following example: Makers created new opportunities for firms to create of color-printed cardboard boxes such as value. This paper has examined ways in those used to package frozen dinners and which companies are using the Internet breakfast cereals have been forced. in add value. Four value-adding activities that essence, to participate in reverse auctions have been enhanced by Internet capabilities in order to make sales. Reverse auctions were addressed-search, evaluation, prob- get their name from flipping the traditional lem-solving, and transaction Search activities one-seller, many-buyers" model to create include processes for gathering information auction systems where many sellers bid for and identifying purchase options. Evaluation the business of one buyer With traditional activities refers to the process of considering auctions, the bidding drives prices up; but alternatives and comparing the costs and ben with reverse auctions bidding drives prices efits of various options. Problem-solving down. In many industries, including the activities include identifying printed cardboard box industry, this bidding needs and generating ideas and action plans process has driven prices down to levels that to address those needs. Transaction activities were unthinkable prior to the advent of Inter- involve the process of completing a sale, net-based auction processes. Some Internet including negotiating and agreeing contrac observers claim that Internet-enabled reverse tually, making payments, and taking delivery. auctions not only create economies, but also These four activities are supported by three allow small suppliers who would not other- different types of content that Internet busi- wise have a chance to participate to be nesses often use--customer feedback, exper included in the bidding. But cardboard box tise, and entertainment programming companies and manufacturers of many other Internet business models provide a con industrial products claim that these Internet text for enacting value-adding activities techniques have increased the bargaining Seven business models have been identified power of buyers to such a degree that their that are proving successful for use by Internet industry has been seriously compromised firms. These include commission, advertising, The long-term impact of this intense price mark-up, production, referral, subscription, competition is uncertain, but to the extent and fee-for-service based models. Strategic hat it damages whole industries, it is doubt use of value-adding activities, as well as the ul whether the net effect will be to create seven business models, can help firms build value across the whole economy competitive advantages and contribute to 170 ORGANIZATIONAL DYNAMICSmakes the salesforce.com solution especially attractive to small and young firms that are trying to hang on to their cash. The company has become successful by developing a sim￾ple business model which provides a solu￾tion that is both differentiated and relatively low cost to the longstanding problem of sales management. It is creative combinations such as this that are helping Internet compa￾nies develop strong new value propositions. There is a contrasting view, however, to the perception that enlightened applications of Internet technologies are creating value. At the industry level, what may be good for a few companies has been devastating for others. That is, there are whole industries that have lost value because of adopting Internet solutions. Consider the following example: Makers of color-printed cardboard boxes such as those used to package frozen dinners and breakfast cereals have been forced, in essence, to participate in reverse auctions in order to make sales. Reverse auctions get their name from flipping the traditional ‘‘one-seller, many-buyers’’ model to create auction systems where many sellers bid for the business of one buyer. With traditional auctions, the bidding drives prices up; but with reverse auctions bidding drives prices down. In many industries, including the printed cardboard box industry, this bidding process has driven prices down to levels that were unthinkable prior to the advent of Inter￾net-based auction processes. Some Internet observers claim that Internet-enabled reverse auctions not only create economies, but also allow small suppliers who would not other￾wise have a chance to participate to be included in the bidding. But cardboard box companies and manufacturers of many other industrial products claim that these Internet techniques have increased the bargaining power of buyers to such a degree that their industry has been seriously compromised. The long-term impact of this intense price competition is uncertain, but to the extent that it damages whole industries, it is doubt￾ful whether the net effect will be to create value across the whole economy. Thus, the Internet is having a strong impact on many business sectors. In some, it is clearly creating opportunities to attract customers and generate new revenues. But successfully creating wealth requires that companies identify which technologies and solutions can be enacted to add value. Mon￾itoring the effect of these technologies and the changes that they stimulate will become an increasingly important task for strategic managers as firms adjust to the new practices and possibilities of the Internet-enabled digi￾tal economy. CONCLUSION The Internet and digital technologies have created new opportunities for firms to create value. This paper has examined ways in which companies are using the Internet to add value. Four value-adding activities that have been enhanced by Internet capabilities were addressed—search, evaluation, prob￾lem-solving, and transaction. Search activities include processes for gathering information and identifying purchase options. Evaluation activities refers to the process of considering alternatives and comparing the costs and ben￾efits of various options. Problem-solving activities include identifying problems or needs and generating ideas and action plans to address those needs. Transaction activities involve the process of completing a sale, including negotiating and agreeing contrac￾tually, making payments, and taking delivery. These four activities are supported by three different types of content that Internet busi￾nesses often use—customer feedback, exper￾tise, and entertainment programming. Internet business models provide a con￾text for enacting value-adding activities. Seven business models have been identified that are proving successful for use by Internet firms. These include commission, advertising, mark-up, production, referral, subscription, and fee-for-service based models. Strategic use of value-adding activities, as well as the seven business models, can help firms build competitive advantages and contribute to 170 ORGANIZATIONAL DYNAMICS