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Chapter 5 E-business strategy

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Chapter 5 E-business strategy Learning outcomes Follow an appropriate strategy process model for e-business; Apply tools to generate and select e-business strategies ... – PowerPoint PPT presentation

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Title: Chapter 5 E-business strategy


1
Chapter 5E-business strategy
2
Learning outcomes
  • Follow an appropriate strategy process model for
    e-business
  • Apply tools to generate and select e-business
    strategies
  • Outline alternative strategic approaches to
    achieve e-business.

3
Management issues
  • How does e-business strategy differ from
    traditional business strategy?
  • How should we integrate e-business strategy with
    existing business and IS strategy?
  • How should we evaluate our investment priorities
    and returns from e-business?

4
Michael Porter on the Internet
  • The key question is not whether to deploy
    Internet technology companies have no choice if
    they want to stay competitive but how to deploy
    it.

Porter, M. (2001) Strategy and the Internet,
Harvard Business Review, March 2001, 6278.
5
Alternative definitions of strategy
  • What is strategy?
  • Defines how we will meet our objectives
  • Sets allocation of resources to meet goals
  • Selects preferred strategic options to compete
    within a market
  • Provides a long-term plan for the development of
    the organization.

6
Figure 5.1 Different forms of organizational
strategy
7
e-Business development Going Forward
Environment Support Levels
Enterprise Development Levels
Taxation Finance
ICT adoption use
Legal Regulatory
Investment in e-Business
Security Trust
Growth in numbers of e-Businesses
Research Development
Numbers employed
E-business Development
E-Business Market Size
National Infrastructure
E-Government
Support Services
E-Business Export growth
Electronic Business Processes
Number of e-Commerce transcations
Skills
National Strategy
Education
8
Key Technology Trendsand Strategies Going Forward
Supplier Integration
Full supply chain integration
Order taking, making and tracking
eBusiness evolution and business benefit
Intranet / Web-mail
eBusiness functionality implemented
Web page
INFORM INTERACT TRANSACT
INTEGRATE
9
What is working?
  • Pornography
  • Travel / Tourism
  • Retail - items that dont need personal touch -
    objectivity in product quality and performance
  • music, books, gifts, Computers, electronic items
  • Auctions
  • Real Estate - houses and investment properties.
  • Customer support services
  • More efficient and effective processes between
    businesses (B 2 B)

10
What is not working?
  • Items which require touch and trial
  • Luxury goods
  • Clothes - beyond Tshirts
  • Groceries - it works for some people but market
    is restricted
  • Note Many OFF line factors determine success of
    Online service. Eg. Transport network, customer
    profiles,

11
Sell-side E-commerce strategy (Chapters 8 9)or
E-marketing/E-CRM Strategy
  • Sell-side e-commerce is a channel strategy
  • Objectives for online contribution percentage
    should drive our strategy
  • Our e-commerce strategy defines how we should
  • Hit our channel leads sales targets
  • Acquisition, Conversion, Retention, Service,
    Profitability
  • Communicate benefits of using this channel
  • Prioritise products available through channel
  • Prioritise audiences targeted through channel
  • Select partners for this channel
  • Channel strategy thrives on differentials
  • BUT, need to manage channel integration.

12
Buy-side E-commerce strategy (Chapters 6 7)or
E-supply chain management strategy
  • Buy-side e-commerce strategy is about maximizing
    operational efficiencies while improving customer
    service quality
  • Operational efficiency KPIs should drive our
    strategy
  • Our buy-side e-commerce strategy defines how we
    should
  • Automate internal processes
  • Link internal resource management systems with
    external purchasing systems
  • Prioritize suppliers/partners collaborating using
    this channel
  • Prioritize applications for E-SCM create a
    roadmap
  • Involves selection of appropriate strategic
    partners.

13
E-business strategy
  • For me, an IS strategy or change management
    strategy (Chapter 10) which ensures resources are
    managed effectively to achieve opportunities from
    Buy-side and Sell-side e-commerce. Also involves
    deploying IS to manage administrative internal
    process and employee knowledge
  • Involves management of information systems
    resources (e-business applications,
    infrastructure/hardware and people/change/
    knowledge management).

14
Figure 5.2 Relationship between e-business
strategy and other strategies
15
Business and E-commerce Strategy
  • E-commerce has changed business strategy.
  • A strategy is a broad-based formula for how a
    business is going to compete, what its goals
    should be, and what plans and policies will be
    needed to carry out those goals.1

1Michael Porter What is Strategy, Harvard
Business Review, November 1996, pp. 69-84.
16
E-commerce Strategy
  • An e-commerce strategy is a
  • To build an e-commerce strategy requires two view
    of an organizations strategy what is wants to
    do (conceptual) and how it will do it (technology
    strategy).
  • One strategy being used by many companies is
    customer relationship management which enables
    them to create to one-to-one marketing experience
    for their customers.
  • Other e-commerce strategies include virtual
    showrooms, increased channel choices, wider
    component choice, and use of mobile technology.
  • Mobile commerce is

17
E-commerce Business Models (cont.)1
1Adapted from Micheal Rappa, http//digitalenterpr
ise.org/models/models.html.
18
E-commerce Business Models (cont.)1
1Adapted from Micheal Rappa, http//digitalenterpr
ise.org/models/models.html.
19
E-commerce Business Models (cont.)1
1Adapted from Micheal Rappa, http//digitalenterpr
ise.org/models/models.html.
20
Web Sites Classified By Purpose
21
Web Sites Classified By Purpose (Cont.)
22
B2B Business Models
  • Strategic sourcing is often carried out through a
    one-to-one business model, but company-centric
    and exchange models are also used.
  • In the one-to-one business model
  • In the company-centric business model
  • The single company dominates the market and
    controls the information systems that supports
    the transactions. Electronic data interchange
    (EDI) or an extranet is often used to link
    trading partners.
  • E-procurement is often the name for B2B
    e-commerce in the many-to-one business model.

23
Company Centric Business Model
24
Exchange Model
  • In the exchange business model, many companies
    use an exchange to buy and sell from each other
    through spot-buying transactions.

25
Mobile Commerce
  • Mobile commerce (m-commerce) relies on the use of
    wireless devices, such as personal digital
    assistants, cell phones, and smart phones, to
    place orders and conduct business
  • Issues confronting m-commerce
  • User-friendliness of the wireless device
  • Network speed
  • Security

26
What happens where there is no e-business
strategy?
  • Missed opportunities for additional sales on the
    sell-side and more efficient purchasing on the
    buy-side
  • Fall-behind competitors in delivering online
    services may become difficult to catch-up, e.g.
    Tesco, Dell
  • Poor customer experience from poorly integrated
    channels.

27
Electronic Payment Systems
  • Digital certificate an attachment to an e-mail
    message or data embedded in a Web page that
    verifies the identity of a sender or a Web site
  • Certificate authority (CA) a trusted third party
    that issues digital certificates
  • Secure Sockets Layer (SSL) a communications
    protocol used to secure sensitive data
  • Electronic cash an amount of money that is
    computerized, stored, and used as cash for
    e-commerce transactions

28
Figure 5.3 BA communicates their online value
proposition (www.britishairways.com) Source
Based on Revolution (2005)
29
Figure 5.4 A generic strategy process model
30
Figure 5.5 Dynamic e-business strategy
model Source Adapted from description in
Kalakota and Robinson (2000)
31
Figure 5.6 Elements of strategic situation
analysis for the e-business
32
Figure 5.7 Summary applications of a portfolio
analysis for The B2B Company
33
Figure 5.8 SWOT analysis for The B2B Company
34
Figure 5.9 Customer demand for e-marketing
services for The B2B Company
35
Figure 5.10 Competitive threats acting on the
e-business
36
Porters five forces
37
Activity impact of Internet
  • For one of the industries below, assess how the
    Internet has changed the competitive forces, e.g.
    has it increased or decreased power of suppliers
    and customers
  • Industries
  • Banking
  • Supermarkets
  • Oil industry
  • Rail industry

38
Figure 5.11 Elements of strategic objective
setting for the e-business
39
Figure 5.12 An evaluation tool relating
information to business value. An organizations
use of information on each axis can be assessed
from 1 (low useof information) to 10 (high use
of information) Source Marchand et al. eds (1999)
40
Figure 5.13 Capital One web site
(www.capitalone.co.uk)
41
Figure 5.14 Direct and indirect Internet
contributions for fast-growth companies inthe
USA Source PricewaterhouseCoopers (2000)
42
Figure 5.15 Grid of product suitability against
market adoption for transactionale-commerce
(online purchases)
43
Table 5.5 Vision of online revenue contribution
for The B2B Company
44
Figure 5.16 Elements of strategy definition for
the e-business
45
Figure 5.17 Strategic options for a company in
relation to the importance of the Internet as a
channel
46
Right Channelling
  • Right channelling can be summarized as
  • Reaching the right customer
  • Using the right channel
  • With the right message or offering
  • At the right time
  • Examples
  • B2B serve SMEs through e-channels and larger
    clients through personal service
  • Encourage consumers to buy and serve through
    lower cost electronic channels
  • Encourage offline fulfillment/conversion as
    appropriate
  • Different levels of service/promotion for
    different customers.

47
Figure 5.18 Liveperson an example of a service
to assist with right-channelling Source
www.liveperson.com
48
Figure 5.19 Using the Internet to support
different growth strategies
49
Figure 5.20 smile (www.smile.co.uk) Source
Reprinted by permission of The Co-operative Bank
50
Figure 5.21 Dabs.com (www.dabs.com)
51
Figure 5.22 Elements of strategy implementation
for the e-business
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