The Research On Establishment Of Business Enterprise In Internet Industry Based On Performance Model

The internet industry in China is one of the most innovative industries. According to the latest statistics of ministry of information industry, the number of netizens in China had reached 137,000,000 by the end of 2006. it contributes to the formation of the unprecedented internet market. New technologies, business modes and new applications sprung up continuously in the market. The establishment of new enterprises emerges in large numbers, furthermore the people involved in internet industry both the elites and the grassroots have a bigger influence on social events. On the basis of widespread of usage of hardware devices such as broad band, the internet industry in China developed really fast and becomes the largest information country second only to the U.S.A.There are golden business opportunities in Chinese internet industry; according to the investigation carried out by Morgan Stanley in U.S.A. the profit rate of Chinese internet industry is much higher than the average level. It also points out that the average profit rate of listed companies in China is 32%,much more than the leading companies such as Google,yahoo and eBay whose average profit rate is 19%.In the meanwhile, the labor cost is much lower than the global level.The international magnates and venture capital attracted by the business potential of Chinese internet industry and come in big crowds. As a result, more miracles are brewing now. More and more innovative thoughts have come to the international arena. Still there are more innovations need to be commercialized. Countless entrepreneurs involved in establishing business in internet industry. They need theories to guide them. However, Internet industry is quite different with traditional industries in the aspects of operation modes, the ways of making profit, and management modes. Traditional theories on establishment of business enterprise are of limit usage here. The rising of internet has been no more than a decade and current it still undergoes major changes continuously. Relative theories on internet enterprises can not keep up with the fast speed at which internet industry is developing now. Moreover, non-systematic and theme research dedicated to starting a venture in internet industry is very rare. Therefore on the basis of research performed by other scholars, this paper takes internet industry's characteristics into consideration, analyzes the problems newly start business enterprises are facing now and gives solution to them. The author sincerely hopes that the paper can contribute to the theory of establishment of business enterprises in internet industry.There are five chapters in this paper.The first chapter is a general introduction. It presents the content and value of this paper.Chapter Two is literature review. Major theories since the 1980th on establishment of business in internet industry have been reviewed. Based on the existing research, domestic and foreign scholars have reached a consensus that establishing a business is a complex social process. It is influenced by flexible factors. Therefore the research on establishment of business enterprises need integrate the past theories, mix the flexible factor together and take multi-aspect and process into consideration. More systematic research framework needs to be constructed to explain and predict all kinds of complicated business establishment phenomenon in reality. It is also the research target of this paper. Chapter Three analyzes the performance model of business establishment in internet industry. At the beginning, the performance of establishment is defined,and then ,the frameworks of previous research are reviewed. In combination of the characteristics of internet industry, performance model of establishing business in internet industry is constructed. The model shows that five factors are relative to the starting of a business in internet industry. They are the entrepreneur and his team,the current situation of internet industry,the resource of enterprise,the environment of establishment of business and the efficiency of management mode.Chapter Four is the main body of this paper. The five factors which influence performance are analyzed based on the framework in chapter three. The first part of this chapter explained the core function of entrepreneurs and his team during establishment of business in internet industry. The entrepreneur should be talented; meanwhile special attention should be paid to organization culture and complementation effect. The second part of this chapter introduces the current situation of internet industry. Currently the industry develops fast and the industry chain has just formed and need further improvement. There are golden opportunities hiding in the industry. Enterprises need to seize the opportunity and use their resource properly to establish new business. The third part of this chapter analyzes the resource factors. As to enterprises in internet industry, human resource,capital and technology are indispensable to success. These resources must be distributed and monitored properly. The forth part of this chapter is focus on the environment for establishing business enterprise in internet industry. The enterprise must know the economic environment,law and policy environment and social environment etc. Thus it can take advantage of favorable environment and avoid the unfavorable. The fifth factor influences the success of establishing an enterprise in internet industry is discussed in the fifth part of this chapter. Management is the key to success but it is most likely ignored.Chapter Five summarizes the paper and points out the limitation of the research. It also indicates the direction for future research. Research on the establishment of business in internet industry is sparse now. However the enterprises need this kind of research badly.The target of the research is to analyze the problems encountered when a business enterprise is established in internet industry. General solutions are found out. These solutions can serve as guideline for entrepreneurs.