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Adding Strategic Value Throughe-Business Innovation
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Define e-Business strategy
Describe factors that affected e-Business
strategy development Define e-Business strategy model
Describe the impact of e-Business model
towards the supply and value chain system
Outline an e-Business strategy and approach
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Definitions by Chaffey(2009):
Strategy
The future direction and actions of an organization
E-Business StrategyThe approach which applications of internal
and external
communications can support and influence corporate strategy
E-Business strategy focuses on how to do business differently
online
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Macro environment-SLEPT
Macro
factor
social
legal
political
technological
economic
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Micro environment
Factors within an organizationthat affect its performance
and decision-makingfreedom.
Include internal resources andcapabilities, competitors,
customers, distributionchannels, suppliers, and thegeneral
public.
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Figure 5.1 Different forms of organizational strategy refer to
page 203.
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Define a specific goals and approaches for
using electronic channel.
Examples: How to communicate with customers and
partners?
How to conduct an online promotion/marketing?
How to sell things online?
How to manage an online business?
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Defines how different marketing and supply
chain channel should integrate and support
each other. Example: Communication, product and
service development, information sharing etc.
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Characteristics: A channel strategy
Specific objective clearly defined
Communicate the benefits, prioritize audience and target
Create differential value for all parties
Create channel integration- right channeling Reaching the right
customer
Using the right channel
With the right message
At the right time
Gain values internally through information sharing andprocess
efficiency
Self-reading- Mini case study 5.1 page 206-207
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Describe how Maybank2u.com communicates
their online value proposition.
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Describe how Airasia communicates their
online value proposition.
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Describe how Amazon communicates their
online value proposition.
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Relationship between organizations and
suppliers
Relationships between organizations andtheir customers
Relationships within the organization
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Figure 5.4 A generic strategy process model- refer page 210
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Collection and review of information about:
organizations internal processes
resources and external marketplace factors
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Figure 5.6 Elements of strategic situation analysis for the
e-business page 213
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Review of
technological,
financial and
human resources of an organization and
how the above are utilized in business processes
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To assess current
information
systems
capability andalso to inform
future strategies
Figure 5.7 Summary applications of a portfolio analysis for The
B2B Company-page 216
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Help organization
analyze their
resources in term
of strengths andweaknesses and
match them
against threats
andopportunities
Figure 5.8 SWOT analysis for The B2B Company page 217
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Assessment of the demand for e-commerce services
amongst existing and potential customer segments
Figure 5.9 Customer demand for e-marketing services for The B2B
Company-page 218
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Competitive Threats
1. Threat of new e-commerce entrants
2. Threats of new digital products
3. Threat of new business models
Sell-side threat
1. Customer power and knowledge
Use Internet to evaluate products and compare prices
2. Power of intermediaries
Channel conflicts result of disintermediation
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Buy-side threats
1. Power of
suppliers
An opportunity
for buyers
2. Power of
intermediaries
Risk include costof integration
Figure 5.10 Competitive threats acting on the e-business page
220
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Powerof
suppliers
Bar aining
powers of
customers
Extent ofrivalr
etween
competitors
Threat of
substitutes
Threat of new
entrants
The business
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Figure 5.5 Dynamic e-business strategy modelSource: Adapted from
description in Kalakota and Robinson (2000)
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Key element in
strategy process
model
Statement and
communication of
an organizations
mission, vision and
objectives.
Figure 5.11 Elements of strategic objective setting for the
e-business- page 223
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OURCOMPANYVision
Mission
Objectives
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A mental image of the possible and future
state of the organization.
Include view of the future relevance of the
Internet to their industry.
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Adding value
Providing better-quality products and services
Reduce costs
Making business process more efficient
Manage risks
Create different functions and professions
Create new reality
Can be used to innovate
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Example- refer to table 5.4, page 227
Objectives
Develop revenue from new geographical markets
Strategies to achieve goals
Create EC facility for standard products and assign
agents to these markets
Key performance indicators Achieve combined revenue ofRM1mil by
year-
end online revenue contribution of 70%
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States the percentage of company revenue
directly generated through online transaction
Figure 5.14 Direct and indirect Internet contributions for
fast-growth companies in
the USASource: PricewaterhouseCoopers (2000)
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Involved
formulation, review
and selection of
strategies to achieve
strategic objectives.
It is driven by the
objectives, vision
and mission.
6 key decisions may
involve.
Figure 5.16 Elements of strategy definition for the
e-business
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Define a right channel
Bricks and mortar
Bricks and clicks
Clicks/ Internet pureplay
Refer table 5.7-Right channeling Examples:
B2B serve SMEs through e-channels and larger clients
throughpersonal service
Encourage consumers to buy and serve through lower cost
electronicchannels
Encourage offline fulfilment/conversion as appropriate Different
levels of service/promotion for different customers.
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Figure 5.17 Strategic options for a company in relation to the
importance of the
Internet as a channel
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How the company should restructure or
change its capabilities for e-business
The choices are:
In-house division- integration
Joint venture
Strategic partnership
Spin-off
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Review of opportunities from new business
and revenue models
Need to review new revenue opportunities
and competitor innovations
Self-reading: Mini case study 5.2- Innovation
in the Dell business model, page 239-240.
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Consider options created through
disintermediation and reintermediation
Self-reading: Mini case study 5.3- 3M
innovates in the e-marketplace, page 241-
242.
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Decide on which market to target Decide on technology to be used
to address
new markets and new products. Example of strategies:
Market penetration
Market development
Product development
Diversification
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Figure 5.19 Using the Internet to support different growth
strategies
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Figure 5.20 smile (www.smile.co.uk) Mini case study 5.4, page
244-245Source: Reprinted by permission of The Co-operative Bank
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Position the product based on customerperception of value or
brand: Product quality
Service quality Price
Fulfillment time Position product for online market
Product performance excellence
Price performance excellence
Transactional excellence
Relationship excellence
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Include all
tactics to
achieve the
objectives
Self-reading:
Mini case study
5.5., page 549-
550.
Figure 5.22 Elements of strategy implementation for the e-
business- page 249
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Timing errors
Lack of creativity
Offering free services
Over-ambition
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Situation analysis- insufficient research fordemand and
competitive forces
Objective setting- unrealistic objectives/ not
clear Strategy definition poor decision about
business, revenue model, market, etc. Implementation- problems
with customer
service, quality, infrastructure, changemanagement, etc.
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1. Content2. Convenience3. Control4. Interaction
5. Community6. Price sensitivity7. Brand image8. Commitment9.
Partnership
10. Process improvement11. Integration
Your tasks:Find out how these factors maycontribute to the
success of e-Businessimplementation in an organization.
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E-business strategy process model:
Continuous internal and external analysis
Clear statement of vision, mission and objectives
Strategy development can be broken down into
several activities such as formulation and selection
Strategy implementation
R
equired control Responsive to changes in marketplace.
A four stage model can be used as a framework.
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Define e-Business strategy
Select a retailer of your choice, and describe
the main elements of its situation analysis
should comprise.
Define a four stage model for strategy
development.
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Google Image, http://www.google.com
accessed on 21 April 2011.
Chaffey, D., (2007, 2009), E-Business and e-CommerceManagement,
3rd and 4th Edition,
Prentice Hall.
Phillips, P., (2003), e-Business Strategy,
McGraw Hill.
