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ELC 200


Expand wireless services into Europe, UK and/or Germany (S1, O1, O3) ... Information directories and yellow pages, search engine, member-generated content ... – PowerPoint PPT presentation

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Title: ELC 200

ELC 200
  • Day 26

  • Questions from last Class?
  • Assignment 6, 7 8 all posted
  • Assignment 6 Corrected
  • 6 As, 5 Bs, 1 C, 1 F (late) and 1 MIA
  • Assignment 7 due Today
  • Will have them back to you on Thursday
  • Assignment 8 due May 8 _at_ 8AM
  • EBiz plan and presentations
  • Send your plans and PowerPoints to me in WebCT by
    8AM on May 8
  • More information in assignments section of WebCT
  • Today we will the discussing eCommerce

E-Strategy Landscape
  • Strategy initiation organization prepares
    information about its vision, mission, purpose,
    and the contribution that EC could make to the
  • Strategy formulation
  • Identification of EC applications
  • Cost-benefit analysis
  • Risk analysis

E-Strategy Landscape (cont.)
  • Strategy implementation
  • Organizations resources are analyzed
  • A plan is developed for attaining the goals
  • Strategy assessment
  • Organization periodically assesses progress
    toward the strategic goals
  • Involves the development of EC metrics

Exhibit 11.1The Landscape of EC Strategy
Strategy Initiation
  • Strategy initiationthe initial phase of
    e-strategy in which an organization prepares
    information about its vision, mission, purpose,
    and the contribution that EC could make
  • Review the organizations business and IT vision
    and mission
  • Generate vision and mission for EC
  • Begin with industry and competitive analysis

Industry Assessment
  • What industry is the EC initiative related to?
  • Who are the customers?
  • What are the current practices of selling and
  • Who are the major competitors? (How intense is
    the competition?)
  • What e-strategies are used, by whom?
  • How is value added throughout the value chain?
  • What are the major opportunities and threats?
  • Are there any metrics or best practices in place?
  • What are the existing and potential partnerships
    for EC?

Company Assessment
  • The organization investigates its own
  • Business strategy
  • Performance
  • Customers
  • Partners
  • It looks at everything that has an impact on its
  • Processes
  • People
  • Information flows
  • Technology support

Industry, Company, andCompetitive Analysis
  • SWOT analysisa methodology that surveys the
    opportunities and threats in the external
    environment and relates them to the
    organizations particular strengths and
  • SWOT Analysis
  • Strengths
  • Opportunities
  • Weaknesses
  • Threats

Exhibit 11.2SWOT Matrix
(No Transcript)
Competitive Intelligence on the Internet
  • Internet can play a major role as a source of
    competitive information (competitive
  • Review competitors Web sites
  • Examine publicly available financial documents
  • Edgar Online, Valueline
  • Ask the customersaward prizes to those who best
    describe your competitors strengths and

Competitive Intelligenceon the Internet (cont.)
  • Analyze related discussion groups
  • Find out what people think about a company and
    its products and competitor's products
  • Reaction to new ideas and products
  • Use information delivery services
  • Find out what it published on the Internet
  • Known as push technologies
  • Corporate research companies provide information
    about your competitors
  • Examine chat rooms

Issues in Strategy Initiation
  • To be a first mover or a follower?
  • Advantages
  • Chance to capture large markets
  • Establishing a brand name
  • Exclusive strategic alliances
  • Disadvantages
  • Cost of developing EC initiative is usually very
  • Chance of failure is high
  • System may be obsolete as compared to second wave
  • No support services are available at the

Should You Have a SeparateOnline Company?
  • Disadvantages
  • May be very costly and risky
  • Collaboration with off-line business may be
  • Lose expertise of business functions unless you
    use close collaboration
  • Advantages
  • Reducing or eliminating internal conflicts
  • Providing more freedom to management in pricing,
    advertising, etc.
  • Can create new brands quickly
  • Take the e-business to an IPO and make a fortune

Strategy Formulation
  • Strategy formulation
  • Development of long-range and strategic plans
    to exploit opportunities and manage threats in
    the business environment in light of corporate
    strengths and weaknesses
  • Includes examining or redefining EC mission
  • Specifying achievable objectives
  • Developing strategies
  • Setting implementation guidelines

Discovering EC Opportunities
  • 3 common mistakes in allocating EC investment
  • Let a thousand flowers bloomfund many projects
  • Bet it allput everything on a single high-stake
  • Trend-surffollow the crowd toward the next big
  • Any of the above can be risky and costly

Discovering EC Opportunities (cont.)
  • Approaches to identifying EC opportunities
  • Problem-driven
  • Technology-driven
  • Market-drivenwaiting to see what the competitors
    will do
  • Fear or greed-driven
  • Afraid if they do not practice EC they will be
    big losers
  • Think they can make lots of money going into EC

Determining an AppropriateEC Application
  • Find the most appropriate portfolio in order to
    share limited resources
  • Combine long-term speculative investments in new
    potentially high-growth business
  • With short-term investments in existing,
    profit-making businesses
  • Boston Consulting Groups matrix
  • Cash cows Questionable projects
  • Starts Dogs

BCG Matrix
Relative Market Share Position
High 1.0
Medium .50
Low 0.0
Industry Sales Growth Rate
High 20
Medium 0
Low -20
Making the Business Case for EC
  • Business casewritten document that is used by
    managers to garner funding for specific
    applications or projects by providing
    justification for investments
  • Provides foundation for tactical decision making
    and technology by management
  • Helps clarify the companys use of its resources
    to accomplish the e-strategy

Content of an E-Business Case
  • Business case for EC approach for garnering
    funding for projects used to
  • Provide justification for investments
  • Provides bridge between EC plan and the execution
  • Provides foundation for tactical decision making
    and technology risk management
  • Clarifies how the organization will use resources
    to accomplish the e-strategy

Content of an E-Business Case (cont.)
  • Content of an E-business case
  • Strategic justificationwhere are we going?
  • Generational justificationhow will we get
  • Technical justificationwhen will we get there?
  • Financial justificationwhy will we win?

Cost-Benefit and Risk Analysis
  • Revenue model
  • Properly planned revenue model is a critical
    success factor
  • Revenues from sales depend on customer
    acquisition cost and advertisement
  • Must be figured into the analysis
  • How to conduct an
  • e-business case
  • Develop goal statement
  • Set measurable goals
  • Develop short- and long-term action plans
  • Gain approval and support

Cost-Benefit and Risk Analysis (cont.)
  • It is difficult to justify EC investment due to
    many intangible variables
  • Return on investment (ROI)
  • Discounted cash flow
  • Two common methods
  • Value proposition
  • Risk analysis

Value Proposition
  • Value propositionthe benefit a company can
    derive from implementing a new project, such as
    EC, usually by increasing its competitiveness and
    by providing better service to its customers

Risk Analysis
  • Risk analysis program should
  • Identify all potential risks
  • Assess potential damage
  • Evaluate possibility of protection (insurance)
  • Evaluate cost of protection vs. benefits
  • E-business risks
  • Strategic risks
  • Financial risks
  • Operational risks

Issues in Strategy Formulation
  • How to handle channel conflicts
  • Let established old-economy-type dealers handle
    e-business fulfillment
  • Sell some products only online
  • Help your intermediaries (e.g., build portals)
  • Sell online and off-line
  • Do not sell online

Issues in Strategy Formulation (cont.)
  • How to handle conflict between off-line and
    online businesses
  • Clear support of top management
  • Use of innovative processes that support
  • Clear strategy of what and how

Issues in Strategy Formulation (cont.)
  • Pricing strategy
  • Setting prices lower than off-line business may
    lead to internal conflict
  • Setting prices at the same level may hurt
  • Should you get financing from big venture capital
  • Venture capital financing causes loss of control
    over business
  • Benefit access to various VC experts and get the
    cash you need

Strategy Implementation
  • Strategy implementation--The execution of the
    e-strategy plan, in which detailed, short-term
    plans are developed for attaining strategic
  • Establish a Web team that continues the execution
    of the plan
  • Start with a pilot project
  • Planning for resources

Strategy Implementation (cont.)
  • Strategy implementation issues
  • Evaluating outsourcing
  • Build an in-house EC infrastructure
  • Purchase a commercial EC software package or EC
  • Use a Web hosting company
  • Partners strategy
  • How to coordinate B2B and B2C

Strategy and Project Assessment
  • Strategy assessmentthe periodic formal
    evaluation of progress toward the organization's
    strategic goals may include needed actions and
    strategy reformulation
  • Objectives of assessment
  • Find out if EC project delivers what it was
    supposed to deliver
  • Adjust plans if necessary
  • Determine if EC project is still viable
  • Reassess initial strategy in order to learn from
    mistakes and improve future planning
  • Identify failing projects as soon as possible and
    determine reasons for failure

Measuring Results Using Metrics
  • Metrica measurable standard or a target against
    which actual performance is compared
  • Response time to customers enquiries
  • Response quality
  • Security/trust level
  • Download time,
  • Timeliness of fulfillment
  • How up-to-date information
  • Availability
  • Site effectiveness, ease of use, and navigability

Measuring Results Using Metrics (cont.)
  • Balanced scorecarda structured methodology for
    measuring performance in organizations, using
    metrics in four areas
  • Finance
  • Customers assessments
  • Internal business processes
  • Learning and growth

Measuring Results Using Metrics (cont.)
  • Performance dashboarda structured methodology
    proposed by Rayport and Jaworski (2001) for
    measuring EC performance using
  • Desired outcomes
  • Corresponding metrics
  • Leading and lagging indicators of performance

Performance Dashboard
EC Failures Lessons Learned
  • E-Tailing failures
  • Lack of funding
  • Incorrect revenue model
  • Exchange failures
  • Revenue growth too slow
  • Need to move to new business model
  • EC initiatives failures
  • Levi Strauss stopped online direct sales of its
    apparel (levistrauss.com) when major distributors
    and retailers put pressure on the company not to
    compete with their brick-and-mortar outlets

Success Stories Lessons Learned
  • Reasons for success
  • Brick-and-mortar companies add online channels
  • Mergers and acquisitions
  • Peter Drucker
  • Analyze the opportunities
  • Go out to look
  • keep it focused
  • Start small (one thing at a time)
  • Aim at market leadership

Success Stories Lessons Learned (cont.)
  • Asian CEOs CSFs
  • Select robust business models
  • Understand dot-com future
  • Foster e-innovation
  • Evaluate a spin-off strategy
  • Co-brand
  • Employ ex-dot-com staffers
  • Focus on the e-generation as your market
  • Get the technology right, avoid expensive
    technology and technology malfunctions

Virtual Communities
  • Virtual communitya group of people with similar
    interests who interact with one another using the
  • Elements of interaction
  • Communicationbulletin boards, chat
    rooms/threaded discussions, e-mail and instant
  • Informationdirectories and yellow pages, search
    engine, member-generated content
  • EC elementse-catalogs, shopping carts, ads,
    auctions of all types

Virtual Communities (cont.)
  • Communities of relations (practice)organized
    around certain life experiences
  • Communities of fantasyshare imaginary
  • Communities of transactionsfacilitate buying and
  • Communities of interestpeople interact with each
    other on a specific topic

Virtual Communities (cont.)
  • Commercial aspects of community
  • Understand a particular niche industry
  • Build a site that provides valuable information
  • Site should mirror the steps a user goes through
    in the information-gathering and decision-making
  • Build a community that relies on the site for
    decision support
  • Start selling products and services that fit into
    the decision-support process

Exhibit 11.9Value Creation in E-Communities
Virtual Communities (cont.)
  • Financial viability of communities
  • Based on sponsorship and advertisement
  • Expenses are very high because of the need to
  • Fresh content
  • Free services
  • Free membership
  • This model did not work well, many companies
    sustained heavy losses in 2000-2001 too few
    members, too few purchases

Virtual Communities (cont.)
  • Key strategies for successful online communities
  • Increase traffic and participation
  • Focus on the needs of the members (facilitators
    and coordinators)
  • Encourage free sharing of opinions and
  • Financial sponsorship is a must
  • Consider the cultural environment
  • Provide tools and activities for member use
  • Community members involved in activities and
  • Guide discussions, provoke controversy, and raise
    sticky issues

Going Global
  • Decision to go global is a strategic one
  • Geographical borders are falling
  • Artificial borders are being erected through
  • Local language preferences,
  • Local regulations
  • Access limitations

Benefits and Extent of Operations
  • Major advantage of ECability to do business any
    time, anywhere, rapidly at a reasonable cost
  • Success stories
  • ETRADE or boom.com as your broker for stock
  • Amazon.com
  • Small companies sell to hundreds of customers
    worldwide (virtualvine.com)
  • Increasing number of out-of-the-country vendors
    participate in electronic requests for quotes
  • Successful employees recruitment
  • Successful collaboration in B2B exchanges

Barriers to Global Electronic Commerce
  • Legal Issues
  • Uncoordinated actions must be avoided and an
    international policy of cooperation should be
  • Market Access Issues
  • Companies starting e-commerce need to evaluate
    bandwidth needs by analyzing the data required,
    time constraints, access demands, and user
    technology limitations
  • Financial Issues
  • Customs and taxation
  • Electronic payment systems

Small Business Goes Global
  • Cardiac Sciencetrying to break into the
    international market for years
  • Within 2 years after Internet inception in the
    company, it was shipping its products to 46
  • Today, 85 percent of the companys revenue is
    international, much of this is executed at

Small Business Goes Global (cont.)
  • Advice for small businesses going global at
  • Universal Business Exchange (unibex.com)
  • Several government agencies (stat-usa.gov)
  • Cardiacs CEO crafting a solid export strategy
    takes a lot more commitment than putting up a
    snazzy Web site and waiting for the world to show
    up at our door. Its all about building

Barriers to Global Electronic Commerce (cont.)
  • Other Issues
  • Language and translation
  • Primary problems are cost, speed, inaccuracy
  • Localization
  • Adapt local business practices
  • Culture
  • Multiple cultures warrant different marketing

Breaking down theGlobal EC Barriers
  • Value the human touch
  • Be strategic
  • Know your audience
  • Be a perfectionist
  • Remember, its the Web
  • Integrate properly
  • Keep the site flexible and up-to-date
  • Synchronize content
  • OECD (oecd.org) read
  • Dismantling the Barriers to Global EC

EC in SMEs
  • Advantages/benefits of EC in SMEs
  • Inexpensive
  • Source of information
  • Advertising
  • Conducting market research
  • Build (or rent) a storefront
  • Low transaction costs
  • Niche markets are best
  • Provide catalogs
  • Way to reach worldwide customers

EC in SMEs (cont.)
  • Disadvantages/risks
  • Inability to use EDI, unless it is EDI/Internet
  • Lack of resources to fully exploit the Web
  • Lack of expertise in legal issues, advertisement
  • Less risk tolerance than a large company
  • Disadvantage when a commodity is the product (for
    example, CDs)
  • No more personal contact, which is a strong point
    of a small business
  • No advantage to being in a local community

Critical Success Factors for SMEs
  • Capital investment must be small
  • Inventory should be minimal or non-existent
  • Electronic payments scheme
  • Payment methods must be flexible
  • Logistical services must be quick and reliable
  • The Web site should be submitted to
    directory-based search engine services
  • Join an online service or mall and do banner
  • Design a Web site that is functional and provides
    all needed services to consumers

Supporting Small Business
  • Technical support from IBM (for a fee of only 25
    per month) at ibm.com.searchbusinesscenter
  • Digitals virtual stores
  • Microsofts Personal Web Server (PWS)
  • Gartner Group provides access to online research
    material at gartner.com

Business Process Reengineering (BPR)
  • Organizational transformationthe process of
    completely or drastically transforming an entire
    organization to a new mode of operation
  • Business process reengineering (BPR)a
    methodology for comprehensive redesign of an
    enterprises processes

BPR (cont.)
  • Redesign of the enterprise process and BPR
  • Does not make sense to automate poorly designed
    processso restructure
  • Necessary to change processes to fit commercially
    available software
  • Fit is required between systems and processes of
    different companies
  • Change processes to fit procedures and standards
    of public e-marketplaces
  • Adjust procedures and processes to align with
    available services (logistics, payments,
  • Changes to assure flexibility and scalability

Workflow Technologies
  • Workflow systemsoftware programs that manage all
    the steps in a business process from start to
    finish, including all exception conditions
  • Two categories
  • Collaborative workflowproducts address
    project-oriented and collaborative processes
  • Production workflowtools address
    mission-critical, transaction-oriented processes

Virtual Corporations
  • Virtual corporationan organization composed of
    several business partners (some of whom may be
    pure-play EC players) sharing costs and resources
    for the production or purchasing of a product or
  • Major attributes of VCs
  • Utilization Excellence
  • Opportunism Lack of borders
  • Trust Adaptability to change
  • Technology

The Future of EC (CSFs)
  • Internet usage
  • Opportunities for buying
  • M-commerce
  • Purchasing incentives
  • Increased security and trust
  • Efficient information handing
  • Innovative organizations
  • Virtual Communities
  • Payment systems
  • Business-to-business
  • B2B exchanges
  • Auctions
  • Going global
  • E-government--comprehensive
  • Intrabusiness EC
  • E-learning

EC Technology Trends
  • EC software and services
  • Search engines
  • P2P technology
  • Integration
  • Wearable devices
  • Clients
  • Embedded clients
  • Servers
  • Networks
  • Wireless communications

The Digital Divide
  • Digital dividethe gap between those who have and
    those who do not have the ability to access
    electronic technology in general, and the
    Internet and EC in particular
  • 90 of all Internet computers are where 15 of
    the worlds population live

Digital Divide
Integrating Marketplace and Marketspace
  • Click-and-mortar organization
  • How to cooperate in planning, advertising,
    logistics, resource allocation
  • How to align the strategic plans
  • B2C ordering systems
  • The impact of EC on our lives may be as much as,
    or more than that of the Industrial Revolution
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