E-Commerce:Formulation of Strategy
Jason Chen, Ph.D. Senior ConsultantTASKCO.COM.TW
[email protected]@gonzaga.edu
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eBusiness Key Concepts eBusiness
the strategy of how to automate old business models with the aid of technology to maximize customer value
eCommercethe process of buying and selling over digital media (e.g., Internet)
eCRM (eCustomer Relationship Management)the process of building,sustaining, and improving eBusiness relationships with existing and potential customers through digital media
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eBusiness Processes
WHY Customer Relationship
Redesign Business Processes (Outside-In)
Applying Technology
WHAT
HOW
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Why e-Business? The Information economy will make all
organizations reassess their positions with respect to their customers-supplier relationship.
“e-Business is bound to come and unless we are able to cope with the changes in this world, our competitiveness will decline.” this is a clear testament to the power of the new
information-based economy and a warning to all companies that inertia must be overcome and change embraced.
By Michiyo Nakamoto, Financial Times, Nov. 23, 1999
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New Terminology of Electronic Commerce
Electronic Business
Electronic Commerce
WebCommerce
ElectronicData
Interchange
Electronic Funds Transfer
Internet Commerce
Which includes:
Electronic advertising Electronic buying and selling Electronic distribution Direct client interaction for Marketing and customer service Groupware, e-mail,electronic collaboration Workflow, automated Forms distribution Secure X.400(e-mail) Business transactions
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Figure 1.1 Established, Online,and Consortium Organizations in the Marketspace
Established organizations
Total Market
Online Organizations
E-commerce Marketspace
E-consortium
N
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The Key to successful business on the Internet ...
The key to successful business on the Internet is not the formulation of a conceptual strategy but the execution of that strategy - the content owners must buy into the strategy and have
the confidence of senior executives, often the decisions the content owners make may have
serious consequences to the organization and its strategy
Buy-in and open discussions are keys to successRobert Plant, eCommerce: Formulation of Strategy, pp.67, 1999, Prentice Hall
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Two Major Elements determines Organization’s Success Core Competency A Value-added
Business Model Value, value, value…
N
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Core CompetenciesDetailed Customer Knowledge and FocusWe will seek to understand, anticipate, and be responsive to ourcustomer’s needs.
Large-Scale System IntegrationWe will continuously develop, advance and protect the technical excellencethat allows us to integrate effectively the systems we design and produce.
Learn, Efficient Design and Production SystemsOur design and production systems will be among the best in the world,characterized by efficient use of assets, short time-to market, short flowtimes, short cycle times, high quality and high inventory turns.
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Why e-Commerce Model is beneficial to your Business? The e-Commerce model is a basic model of
competitive strategy, based on the principles of low costs, high volumes, and comprehensive service, combined with a product range unapproachable through traditional channels.
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Why New Models? We need some new models
for how we go about exploring IT for competitive advantage,
for IT infrastructure how we create it and manage it
for how we acquire, manage and deploy the skills that are needed to run that infrastructure
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The Seven Dimensions of an e-Commerce Strategy (bonding and leadership factors)
Leadership
Infrastructure
Service
Market
OrganizationalLearning
Brand
Technology
N
Bonding factors
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Table 1.1 Leadership Factors for New Internet-Based Organizations
Leadership Factor The pillars of Success for Organization Born on the Internet----------------------------------------------------------------------------------------------Technology
The technology goal must be understood for that organization within its industry and market.
An organization must determine it is going to be an advanced technology leader or follow a technology agenda that relies upon more stable
systems (bleeding versus leading edge).
An organization must determine what is the necessary relationship between the company’s technology or product strategy and the operational
aspects of that strategy.
The technology employed by an organization must service the customers’ needs and expectations from a technology perspective.
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Table 1.1 Leadership Factors for New Internet-Based Organizations (continued)
Leadership Factor The pillars of Success for Organization Born on the Internet--------------------------------------------------------------------------------------------------Technology
Organizations must ask themselves questions such as “Are we a technology company? Can the technology be used to create barriers
to entry? Can technology be used to lock in a customer base?”
Organizations must have clearly defined the to these questions and must work them into their business plan.
Market An organization must determine its target market and whether it is
still realistically open to new entrants.
An organization must understand how the market is going to segment and grow over the near and longer term and know whether the
organization will be able to move rapidly enough to meet those changing needs.
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Table 1.1 Leadership Factors for New Internet -Based Organizations (continued)
Leadership Factor The pillars of Success for Organization Born on the Internet----------------------------------------------------------------------------------------------Market Being born on the Net requires that the organization understand the
possible moves from majors established organizations and utilize its own nimbleness to counter them.
Service An organization must know its customers’ expectations regarding
service level
The organization must understand what its value proposition is and how service facilities or augments it
An organization must understand its own Internet service value chain, the components of which are
--- Understanding the relationship between attracting customers and service levels
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Leadership Factor The pillars of Success for Organizations born on the Internet----------------------------------------------------------------------------------------------Service Understanding how an organization creates service value during a
transaction for a customer.
Understanding how service plays a role in the customer fulfillment process, where the purchase is dispatched.
Understanding the role of customer service in retaining customers and maintaining site adhesion.
Table 1.1 Leadership Factors for New Internet -Based Organizations (continued)
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Table 1.1 Leadership Factors for New Internet -Based Organizations (continued)
Leadership Factor The pillars of Success for Traditional Established Organizations------------------------------------------------------------------------------------------------- Brand
An organization must understand whether it has the ability to create a
strong brand An organization must understand the basis of its brand. Is it
--- Technology leadership?--- Service provision?--- Market positioning?
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Table 1.2 Leadership Factors for Established Organization
Leadership Factor The pillars of Success for Traditional Established Organizations-------------------------------------------------------------------------------------------------- Technology
An organization must understand what technology implications are for that organization --Internet,enterprise resource planning, data Warehouse, etc.
Organization must know whether their processes are aligned to an Internet technology-based approach.
An organization must understand how its customers view and use technology within the marketspace and must leverage that knowledge to build an effective infrastructure that facilities an agile and flexible
e- commerce strategy.
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Table 1.2 Leadership Factors for Established Organization (continued)
Leadership Factor The pillars of Success for Traditional Established Organizations----------------------------------------------------------------------------------------------. Technology
An organization must assess its internal value chain as well as those of its suppliers and build to minimize costs and maximize efficiencies.
Market An organization must understand what the implications of e-
commerce and technology are for the marketspace in which the organization is to compete in terms of:
--- Branding
--- Relationship management
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Table 1.2 Leadership Factors for Established Organization (continued)
Leadership Factor The pillars of Success for Traditional Established Organizations----------------------------------------------------------------------------------------------Market An organization must determine whether its target market is the
same as its traditional bricks-mortar marketspace or if it has moved.
If its core marketspace have moved, is it still realistically open to traditional organizations moving onto the Net?
An organization must understand how the market is going o segment and grow over the near future due to the impact of the internet and must determine whether the organization will be able to move
rapidly enough to meet those changing needs.
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Table 1.2 Leadership Factors for Established Organization (continued)
Leadership Factor The pillars of Success for Traditional Established Organizations --------------------------------------------------------------------------------------------------. Market Organization must assess the impact of pure Internet-based
organizations and use their own traditional core strengths-market knowledge and product knowledge to offset Internet-based
companies’ nimibleness.
Service An organization must determine the new service level expectations
of the customer.
An organization must understand what the customers’ new value proposition requirements are in terms of cost, service level expectations, and information-based service.
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Table 1.2 Leadership Factors for established Organization (continued)
Leadership Factor The pillars of Success for Traditional Established Organizations ----------------------------------------------------------------------------------------------Service Organizations must reassess their service value chain.
-- How are we going to acquire customers?
-- How are we going to develop customer relationships through the new medium?
-- How can we best fulfill the customers’ needs -- bricks and mortar,clicks and mortar, or online?
-- How do we support our customers during purchase and through order fulfillment?
-- How do we retain customers between orders?
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Leadership Factor The pillars of Success for Traditional Established Organizations----------------------------------------------------------------------------------------------Brand• Organizations need to determine how to best leverage their existing
brand.
-- Do we have the ability to create a strong dot-com brand?-- What is the basis of that brand?-- What are the implications for our brand in terms of the technology we employ, develop, or use?-- What are the challenges for creating a new dot-com brand?-- Does the Internet demand an amendment or a completely new service provision?-- Will new brand positioning change our existing brand?
Table 1.2 Leadership Factors for established Organization (continued)
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Table 1.3 Bonding Factors Toward the Development of E-commerce Strategy
Bonding Factors Issues --------------------------------------------------------------------------------------------------Leadership
Does the CEO have a vision for e-commerce?
Does the CEO have a track record of taking technology change in stride?
Do the senior executives share a technology vision? Also, do they understand its impact upon their functional area and the organization
as a whole?
Is the leadership stable or in a continual state of flux?
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Bonding Factors Issues--------------------------------------------------------------------------------------------------Infrastructure
Can the organization’s technology infrastructure support the new model of e-business
Can the organization’s technology infrastructure support the move to mass customization?
What are the implications for the organizational changes needed to be competitive in an e-commerce environment?
Does the organization’s infrastructure interface with the infrastructures of their suppliers and customers in the electronic marketplace?
Table 1.3 Bonding Factors Toward the Development of E-commerce Strategy (continued)
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Bonding Factors Issues----------------------------------------------------------------------------------------------. Organizational Learning Does the organization support internal learning?
-- Scanning the technology horizon for change and then adopting that change where appropriate
-- Developing a self-awareness inside the boundaries of the organization to drive practice and process change
Can the learning of the organization with respect to markets, product, technology, processes, etc., be quickly refocused into a new
technology-based method of production?
Table 1.3 Bonding Factors Toward the Development of E-commerce Strategy (continued)
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Key Factors for an Organization’s Success Several key factors are key to determining
an organization’s potential for success: Does the organization possess first-mover
advantage in the marketspace? Does the organization differentitate itself in the
marketspace? Does the organization posses the ability to be
flexible and agile in the e-marketspace?
N
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The Executive should ... The development and execution of a
successful e-commerce strategy is a difficult intellectual and creative task, one that every executive will have to undertake.
Key Steps: determine the core competencies of your organization determine the limitation in the new markepspace assess the mechanisms available to move forward.
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Types of marketspace B2C B2B B2G G2B B2B2C B2B2E The e-consortium
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Creating an Integrated e-Commerce Strategy Four positional factors
Technology Service Market Brand
Three bonding factors Leadership Infrastructure Organizational Learning.
Ch.2
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Figure 2.1: The Seven Dimensions of an e-Commerce Strategy (bonding and leadership factors)
Leadership
Infrastructure
Service
Market
OrganizationalLearning
Brand
Technology
N
Bonding factors
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Figure 2.1 The Seven Dimensions of ane-Commerce Strategy
Leadership
Infrastructure
Service
Market
OrganizationalLearning
Brand
Technology
N
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What is the Next ... Based on the seven-dimension e-C strategy
model ... If you want your company to succeed, the
solution is to move to an e-Commerce model ASAP.
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Figure 2.1 The Seven Dimensions of ane-Commerce Strategy (bonding and leadership factors)
Service
MarketBrand
Technology
Organizational Learning
Leadership
Infrastructure
N
Bonding factors
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What is the Next ... Based on the seven-dimension e-Commerce
strategy model ... If you want your company to succeed, the
solution is to move to an e-Commerce model ASAP.
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Creating an Integratede-Commerce Strategy (continued)
Organizations will always be adjusting their strategies to meet the changing environment in which they operate, and the model aims at assisting executives in understanding the importance and weighting that need to be applied to each factor.
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Figure 2.2 The Bonds of an e-Commerce Strategy
Leadership
OrganizationalLearning
Infrastructure
Leadership
N
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Integration of the Four e-Commerce Leadership Propositions
In creating an e-Commerce strategy, it is clearly to align and integrate the four main areas of positional strategic focus: technology, brand, service, and market.
This is a challenging task that must be deeply considered at the outset of strategy formulation since both the dollar and opportunity costs of dramatic strategic change after execution can be high.
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Integration of the Four e-Commerce Leadership Propositions (continued)
This is not to say that change is not occurring; change in this arena is inevitable and continuous, with victory coming to those who can adapt fastest and be nimble in the face of change.
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Figure 2.3 Integration of the Foure-Commerce Leadership Propositions
Technology Leadership
Brand Leadership
Market Leadership
Service LeadershipIntegrated e-commerce strategy
N
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Technology Leadership It involves the early adoption of an
emerging technology to achieve a preemptive position.
e-Commerce strategies focused on leadership through technology that are found in all industry sectors.
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Brand Leadership Louis Gerstner, Chairman & CEO: IBM
Branding - it is a very important issue and it will dominate business thinking I suspect for a decade or more.
Internet ability to influence, change, or reinforce corporate branding.
Source: IBM Executive Conference on Information Systems, Latin America, Miami, FL, September 1, 1998
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Developing a Winning E-strategy 1. Ensure the project is backed by a senior
executive. 2. Develop a strategy before developing a
Web presence. 3. Develop a strategy by focusing on
technology, branding, marketing, and service.
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Developing a Winning E-strategy (continued)
4. Develop an IT infrastructure capable of matching the strategic objectives.
5. Identify and use knowledge in the organization.
6. The strategy must add value for customers, and it must change as the requirements of those customers change.
Porter’s Five Competitive Forces Model
THE FIRM TRADITIONAL COMPETITORS
NEW MARKET ENTRANTS
SUPPLIERS
SUBSTITUTE PRODUCTS & SERVICES
CUSTOMERS
Threats
Bargaining power
NTM -45
Elements of Industry Structure
NDr. Chen, The Trends of the Information Systems Technology TM -46
Force ImplicationPotential Uses of IT
to Combat Force
Threat of new entrants New capacitySubstantial resourcesReduced prices or inflation
of incumbent’s costs
Provide entry barriers:economies of scaleswitching costsproduct differentiationaccess to distribution channels
Buyers’ bargaining power Prices forced downHigh qualityMore servicesCompetition encouraged
Buyer selectionSwitching costsDifferentiationEntry barriers
Suppliers’ bargainingpower
Prices raisedReduced quality and services
(labor)
SelectionThreat of backward integration
Threat of substituteproducts or services
Potential returns limitedCeiling on prices
Improve price/performanceRedefine products and services
Traditional intraindustryrivals
Competition:priceproductdistribution and service
Cost-effectivenessMarket accessDifferentiation:
productservicesfirm
Impact of Competitive Forces
Dr. Chen, The Trends of the Information Systems Technology TM -47
Activities of Value Chain
Inbound Logistics
Financeand Accounting
Production
and Manufacturing
Marketingand Sales
Outbound
Logistics Service
Administrative and Other Indirect Value Added
Primary Activities
Support Activities
TM -48
Manufacturing Industry Value Chain Product and Service Flow
Research and Development
EngineeringProduction
and Manufacturing
Marketing Sales and
Distributiion Service
Administrative and Other Indirect Value Added
Primary Activities
Support Activities
TM -49
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Ownership Issues E-centric Structure + Content = Success
Content alone is not sufficient for success
Successes come from a balanced business modelthat involves each business area content provider
contributing to the overall business model.
Ch.3
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Problems and Issues that e-C Strategists face ... Problems and issues that e-C strategists
going forward may face are: business models
transform from the old to the new, or start from afresh
culture: change time
time to market sustainable competitive advantage and customer
value
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Figure 3.1 The E-centric Management Structure
CEO
ManufacturingSales &Service Logistics Finance Personnel
Sales &Service
Logistics
VPE-commerce
Manufacturing
Engineering
Purchasing
Finance
Personnel
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Figure 3.2 The Relationships Structure of an E-centric Organization
SeniorManagement
MarketingAutomation
Peer-to-Peer Planning
Content Owners
VPE-commerce
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Senior Strategic Management Group The overriding driver of a successful
Internet strategy is the leadership demonstrated by senior levels of the organization. Content and services are based around the value
and investment criteria defined by the executive steering group.
The criteria will be in the form of brand, service, and market specifications, with a directive on technological leadership issues.
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Marketing-Automation-Strategy (MAS) Group The MAS group develops a framework for
the operational e-commerce strategy, which is then implemented at the level of the content owners.
This is performed through the creation of peer to peer planning groups.
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Planning Groups The planning group provides the central
structure through which the core operational issues of e-commerce strategy are derived, policies such as:
security content parameters format issues partner-relationship mgt. request for comments,
proposal standards access parameters from
a technical perspective (speeds, bandwidth, requirements, etc.)
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Content Content may be king, but it is value chain
that is the power behind the throne. what content is necessary for success, what customers want in their content, how the content adds value to customers.
Content is strong only when derived from a strong and flexible business model such as that of AOL Time Warner, which can service the customer globally on the customer’s terms.
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Conclusion The key to successful business on the Internet
is not the formulation of a conceptual strategy but the execution of that strategy.
To execute effectively, content ownership has to be exploited.
The content owner must buy into the strategy and have the confidence of senior executives. Buy-in and open discussions are keys to success.
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E-Strategy Leadership through a Technology Focus The technology component has to be in
balance and harmony with the other positional factors - brand, market positioning, and service - to be truly effective.
Strategy will be based on technology strength, technology leadership, or enabling role.Ch.4
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E-Strategy Leadership through a Technology Focus (continued)
The area of technology leadership involves much more than purely the hardware and software that compose an organization’s physical infrastructure.
The 7S model can be employed in a new way to provide a corporate framework through which executives can formulate an internal strategy for e-Commerce.
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Figure 4.1 The Mckinsey 7S Framework
Structure
Strategy
Skills
Shared Values
Staff
Systems
Style
(Source: R.H.Waterman, T.J.Peters, and J.R.Philips, “Structure Is Not Organization,” The Mckinsey Quarterly, Summer 1980, p.7)
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Table 4.1 A Glossary of the 7Ss
Strategy (overall corporate) Strategy can be defined as the determination of a course of action to
be followed in order to achieve a desired goal, position, or vision. Structure
An organization’s structure is the interrelationship of processes and human capital in order to fulfill the enterprise’s strategic objectives.
Systems The organization’s information systems and infrastructure.
Staff Human recourses management
Style Corporate style is a synthesis of the leadership philosophy of
executive management, the internal corporate culture generated, and the orientation an organization adopts to its markets, customers, and competitors.
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Table 4.1 A Glossary of the 7Ss (continued)
Skills The unique or distinctive characteristics associated with an
organization’s human capital. Shared Values
The concepts that an organization utilizes to drive toward a common goal through common objectives and a common value set.
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Strategy: The Alignment of Technology and Corporate Planning
The whole basis of technology strategy formulation is the ability of the organization’s executive to achieve alignment, that is alignment between the technology strategy and the strategy of the enterprise as a whole.
CEO ConceptualStrategic Horizon
Figure 4.2: Strategy and Technology Horizons
CIO
EmergingTechnology Horizon
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Strategy: The Alignment of Technology and Corporate Planning (continued)
The best-case senior is for the CEO and CIO to have synergy and an aligned planning horizon.
Executives should be efficient and adding value by planning ahead and contemplating the bigger picture rather than being reactive, putting out fires.
DecliningCore
Core
CIO & CEO
EmergingCore Aligned
Planning Horizon
Figure 4.3: Technology Planning Horizons
Lead Time
Technology Window N
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Strategy: The Alignment of Technology and Corporate Planning (continued)
The alignment of IT strategy and organizational strategy is the key that unlocks a firm’s ability to complete effectively and adapt to changing market forces.
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Structure: Characteristics of a Flexible Agile e-Organization
Flexibility
Low Cost
Market Knowledge
Knowledge management
e-Org
ServiceG
oodsYouthful Mature
Age of Organization
Product Type
N
Figure 4.4 Technology Strengths (nature of the product and the maturity of the organization)
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Systems: Figure 4.5 An Integrated E-commerce Systems Architecture
CustomerCustomer
Customer
Front Office--Internet Portal
KnowledgeManagement
ERP
Back OfficeTransaction Processing
Supplier ERP Interface
Back Office -- Internet Portal
DataWarehouse
Management
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Staffing:Figure 4.10 The Organizational Level HR Requirements
Information Systems Organizational Structure
Strategic development and business planning including
IS planning
Functional level informationtechnology planning
Project scoping and planning
Application development and implementation
Executive Team
TechnicalSystems
RelationshipManagement
ERP
Call Center
Customer
Supplier
KM
DW
3Cs
3Cs
3Cs: Capture, Cultivate, and Create employees and their skills - are managed and coordinated through the executive teams
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Six Vital Drivers for e-Commerce
1. The obsessive and continuous focus on the business imperative,
2. Interpretation of external IT success stories, 3. Establishment and maintenance of IT
executive relationship, 4. Concentration of the IT development effort, 5. Achievement of a shared and challenging
vision of the role of IT
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Style and Shared Values - Definitions Style: “characterization of how key
managers behave in achieving the organization’s goals; also the cultural style of the organization,”
Shared values: “ the significant meanings or concepts that an organization utilizes to drive towards a common goal through common objectives and a common value set.”
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Style and Shared Values:Figure 4.11 - The Dimensions of an Agile E-organization
Low TransactionCosts
E-org
Scale&Scope
Scale&Scope
Scale&Scope
MassCustomization
Flexibility
Key characteristics to achieving an agile e-organization are three initiatives:1. The drive for flexibility in process.2. The drive to lower transaction costs.3. The drive to achieve mass customization for the customer.
N
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1. StrategyIssue: Focus upon alignment and planning
Action Items: The CIO must have a clear vision of the technology
horizon and be able to communicate the implications of these new technologies to the CEO and the business.
Build a lead-time buffer for organizational learning between the technology horizon and the deployment of that technology.
Create a roll-in, roll-out technology window; new technology becomes an emerging core technology, transitioning to core before finally declining and being discarded.
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2. StructureIssue: Focus upon becoming an e-organization
Action Items: Strive to balance organizational and technical
strategies. Youthful companies must exploit the flexibility and
low-cost structure to complete. Aiming to capture self-knowledge and market knowledge to fend off existing organizations.
Mature organizations must leverage their extensive self-knowledge and market knowledge in order to reduce their costs and recreate their processes in a more flexible manner.
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3. SystemsIssue: Technology integration
Action Items: ERP deployment: Automation without change is
detrimental; the EPR must be deployed with the aim of generating greater organizational self-knowledge, flexibility of process, and lowered operational costs.
Data warehouse: Focus upon the two dimensions of data warehousing: cost efficiency, using the ERP data through the data warehouse to reduce operational costs, and information effectiveness to generate competitive intelligence in the form of added-value information services.
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3. SystemsIssue: Technology integration (Continued)
Action Items:
Knowledge management: The focus of the knowledge management system is to inform and add value, not to be a “look-up table”. The creation of a metrics-based scored approach to the utility of the knowledge management system is vital.
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4. StaffingIssue: The role of the CIO
Action Items: Create a strategy for retaining and maintaining a strong
pool of skills both at the executive level and at the technical level.
Think outside the box for staffing solutions, and identify partners and consultants that could assist the process should internal skill sets be unavailable.
Many issues surrounding staff development have traditional solutions that involve building trust, communications, and growth opportunities for the employee, as well as the organization understanding the value of the employee and the employee adopting the values of the corporation.
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5. SkillsIssue: The role of the CIO
Action Items: The CIO must continue to add value through traditional
routes, but adding to this list the ability to Capture, Cultivate, and Create an employee base with vision, technical skill, and creativity.
Relationship management: This is a driver that requires heightened attention and focus by the entire organization’s early warning system of change in the marketplace and in customer needs.
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5. SkillsIssue: The role of the CIO (continued)
Action Items: The heightened necessity to nurture employees and
develop the organization’s internal flexibility, creating a dot-com atmosphere of excitement , drive, openness, and creativity within the corporation.
Technical skills: More than ever the CIO must develop crossover skills and the entrepreneurial atmosphere of the new dot-com organization to leverage an integrated ERP, KM, and DW technology position.
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6&7 Style and shared valuesIssue: Leadership
Action Items: Leadership has to come from the very highest reaches
of the organization. Technology allows organizations to add value to
customers through provision of information services. A technology strategy does not come solely from
technology but is based upon leverage the technology through marketing, service, and branding to deliver added value to the customer in the form of information.
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6&7 Style and shared valuesIssue: Leadership (continued)
Action Items: A technology leadership strategy must build value to
the organization, delivering the information the organization requires in order to get closer to the customer and/or wider market coverage as determined in the overall strategy plan of the organization.
The strategy technology plan must be aligned with the overall plan of the organization.
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Developing a Market Focus:Sector Strategies in Segmenting Markets The importance of market leadership
through the Internet channel has rapidly become an important strategy item for established organization.
E-C companies realize that they have to rise to the challenges posed by their virtual competitors in both cyberspace and in traditional marketspaces.
Ch. 5
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Figure 5.1 The Marketspace Spectrum of E-commerce
Internet-basedOrganization
BanksMortgage brokers
InsuranceNewspapers
ManufacturingA Mixed Service and Goods
Organization
An InformationService
Organization
AutomobilesClothing
Machine tools Computers
Hotels, Air lines Consumer Electronics
Medical Systems
Service Production
InternetMarkepspace
N
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Figure 5.2 Internal and External Views of CA-Chemical’s Internet Relationship
Community
Greater AccessTo information
And Data
Corporate
Partners
Recruiting
ClinicalDevelopment
HumanResources
Better InternalDatabase Access
Study CenterRelationships
Cycle TimeReduction
ScientificCommunityAccess and
NetworkResearch
Manufacturing
401K
Benefits
NewsGroup
InformationBanks
InformationSites
MDs, Physicians,and Study Centers
Procurement
Partners
Internal View Functional Area External View
HumanResources
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Figure 5.3 Sony Market Leadership
Create bonds and strongrelationships betweenpartners. Develop a
leading market,technology leadership
position
Flexibility,change,andlong-term desirability
Partnering
Market leadership
Internally drive theorganization to
accommodate changethrough internet and digital
technologies. Create long-termcustomer ”buy-in”as technologyBrand leadership creates loyalty
Create the ability of alltechnologies to connect
together
ConvergentBranding
Create aunifiedglobalbrand
TechnologyIntegration
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Figure 5.4 US Medical Systems Market Leadership
Increased Customer
RelationshipQuality
Brand
Service
Market Leadership
reinforce viatechnology
ComplementThe
Organization’sproducts
Marketing
WiderMarket
Coverage
Technology
FacilitateInteruser
Communication
Focus uponKey issues:
Responsiveness,Delivery,etc.
ExpandGlobal brand
Create aUnifiedGlobalbrand
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Rules of Internet Strategy:Market Leadership 1. Determine the degree to which you will remove or offer
alternatives to the layers of intermediaries that exist between the organization and the customer through the internet channel.
2. Disintermediation is not always positive. Play to your advantages – if you have a strong retail presence utilize it; it is a strength online rivals don’t have immediate access to on their own.
3. Regardless of product, you need a basic internet presence and you need to offer value to the visitor. Even if that is merely traditional contract information, present it in such a way that the brand is reinforced.
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Rules of Internet Strategy:Market Leadership (Continued)
4. Carefully align your internet strategy with your overall business strategy.
5. Avoid frequent and abrupt changes of internet strategy direction.
6. Develop a cohesive strategy across all brands. 7. Make your market leadership strategy consistent with
the branding strategy in the eyes of the customer, not just in the eyes the executives of the advertising agency and marketing groups.
8. Develop a strategy before developing a Web presence.
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Rules of Internet Strategy:Market Leadership (continued)
9. Develop an IT infrastructure to cope with and integrate the changes brought on by a Web presence before they occur. This may be a viable partnering growth opportunity with a technology vendor.
10. Don’t bring an e-commerce solution to the marketplace before it is ready or before the marketplace is ready for it.
11. To get closer to the customer, you must add value for that customer and continue to add value as the requirements of that customer change over time.
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Rules of Internet Strategy:Market Leadership (continued)
12. Derive flexibility and transaction capability from the technology infrastructure upon which the Web presence is based.
13. The Web allows product-based companies to offer new information-based products through the low-cost, omnipotent distribution mechanism of the Internet.
14. If the goal is mass customization, then incorporate the ingredients of speed, innovation, agility, and technology and leverage them through the internet relationship with the customer.
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Rules of Internet Strategy :Market Leadership (continued)
15. Low-cost commodity producers are not immune from the threat of information-added-value competition from within their industry as generated by large, traditional market competitors through the internet.
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Service Leadership:Adding Value to the Customer at Every Point of Contact For pure Internet-based service
organizations, it has come to mean fast, reliable service that is efficient to use and seamless in delivery.
Customers expect the low cost of transactional services via the Internet to be matched by easy-to-use, ergonomic interfaces, backed up by an information-rich premium, global, 24x7 level of service.Ch. 6
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Figure 6.1 Internet Service Value Chain(From Bricks-and-Mortar to Clicks-and-Mortar Transition)
CustomerSupport
(DuringPurchase)
CustomerFulfillment
(PurchaseDispatch)
Customer Service Channel
CustomerAcquisition
(PrepurchaseSupport)
CustomerContinuance
Support(Postpurchase)
BrandReinforcement
N
The Value Chain is “Where the Rubber of e-Commerce Meets the Road”
The development and execution of a successful strategy in each of the Internet service value chain segments is vital for any organization wishing to operate all or part of its business online
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Rules of Internet Strategy:Service Leadership
1. Established strategies of customer service still apply. 2. Internet service strength is derived from providing added
information to the customer on the customer’s terms. 3. Internet customer service aims to build an affinity
relationship. 4. The Internet provides a low-cost, high-quality service channel
opportunity with a global reach. 5. A call center strategy must be defined. 6. The e-mail interface channel must be defined and planned for. 7. A strategy for the virtual call center must be defined well in
advance of its potential implementation.
95
E-branding: The Emergence of New Global Brands
The development of an online branding strategy is a complex operation and one that clearly needs to be tied into the organization’s strategy as a whole, based on the other three factors: Technology. How are we attempting to leverage the
technology, with what consequence on our brand? Market. What is our market segmentation strategy? How
can we define brands across these? Service. What level of service will we deliver through
this channel - full service, low-cost service? How will this impact our brand?Ch. 7
96
Figure 7.1 Internet Branding Strategies
3. BrandReinforcement
4. BrandReposition
2. BrandFollower
1. BrandCreation
97
Internet Branding Strategies 1. Brand Creation: First to Market Wins and
Wins Big for new start-ups and for corporations moving to the
Internet as a business channel, the formulation of an online brand is vital. Those companies (e.g., Amazon, eBay) not only created a new brand, but successfully executed their business model.
2. Brand Follower: A Last-Mover Disadvantage or Recoverable Position? This is evident in copycat sites that mimic the first,
second, or even third mover in an industry but have little intrinsic value of their own.
98
Internet Branding Strategies (continued)
3. Brand Reinforcement - The Development of a Continuous Brand Model across ALL channels, media, and languages, including the Internet A key to a successful business positioning is to achieve the
position of brand leader - universal recognition of name and product. “Sales may not be the goal of every organization, but ultimately every organization wants to ensure that its brand is reinforced online.”
In order to achieve this, organizations have to provide their customers or viewers with current, relevant information, building the quality of their relationships with customers on a continuing bases --- customers service value chain.
99
Internet Branding Strategies (continued)
4. Brand Repositions: Core Brand Values Combined with a Modern Customer Experience Organizations that move through brand repositioning to
create new channels to complement their existing ones, attempting to add value to the customer through reduced cost and convenience, but also offering a source of information for the discerning consumer.
Repositioning may be radical or gradual, depending on the organization and its branding needs.
100
Rules of Internet Strategy:Brand Leadership 1. In new organization, creation of a brand has to be a
primary strategic objective. 2. Branding strength comes from being first mover in
combination with high visibility and the added value derived from the information surrounding the product.
3. Brand reinforcement is a continuous task. The aim is to use the brand reinforcement process to maintain an organization’s relationship with the customer. This is achieved by continuously adding value to the customer through the site.
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Rules of Internet Strategy:Brand Leadership (Continued)
4. Brand reinforcement adds significant value to organizations that can inform consumers, but not sell directly, such as drug manufacturers.
5. Brand positioning can be considered using the internet service value chain model, adding brand definition and value at each point on that chain.
6. Added value for the customer comes from continuous and innovative change of the information surrounding the product and the organization.
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Rules of Internet Strategy:Brand Leadership (Continued)
7. Utilize a mass customization approach in order to move closer to the customer and add value to the customer but not at the expense of the brand.
8. The Internet allows low-cost global branding to occur, hence wider market coverage; however, the cultural sensitivities of the global brand must not be lost through the technology.9.
Brand followers need to reposition as quickly and effectively as possible.
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Rules of Internet Strategy:Brand Leadership (Continued)
10. Established organizations that have not established a branding strategy based upon the Internet need to develop one rapidly and align their overall strategy accordingly.
11. Brand repositioning can be an expensive and difficult process. The establishment of strong and vibrant brand at the commencement of online activity is vital.
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Formulating an Internet Rollout Strategy
E-Commerce as in all aspects of IT and strategy, strategic positioning meant little if it could not be implemented.
The development and hosting of an organization’s Internet presence forms a critical component in the level of success experienced.
Ch. 8
105
Strategies for Developing an Organization’s Website The maturity of the organization The access to skills among its internal technology
group The necessity to create and develop proprietary
technologies The flexibility of the content owners to drive,
control, and harness change The time pressure to be online in the
organization’s virtual marketspace or to lead its market in terms of service and brand
106
The Rollout of an e-Commerce Implementation
The rollout of an e-C implementation is composed of two dimensions: Site development
where strategic goals, ownership issues, and technology all converge to produce a working system
Website hosting selection of, and deployment to, a location or
organization where the system hardware and software will be physically located, maintained, and managed.
Information System Department
Internal R&D Team
(Skunks Works)
Partnering Mode
E-C systemsinfrastructure
Corporate Ownership & Leadership
InternetSystems
DevelopmentCompany
Internal Customer
Added Value
ExternalCustomer
AddedValue
INTERNAL
EXTERNAL
Internal development route External development routePartnering route Request for proposal System deployment
ProcessIntegratio
n
Figure 8.1: Dimensions of Corporate Internet Development
108
Development Options:Where to Develop an e-Commerce SystemThree Basic Development Practices: 1. Internal development
Corporations create their eC systems within the boundaries of their organizations. (for early movers)
2. External development The system’s development is largely outsourced to third
parties to obtain the desired results. 3. Selective sourcing or partnering
External vendors are brought on-site to assist in the development process.
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109
Table 8.1: E-commerce Development Options --Their Strengths and Weaknesses
Internal . Allows proprietary systems . Cost-can be very expense to Development and technologies to be first mover
developed . Resource intensiveness-continuous . Maximizes internal learning need for new skills and
technologies . Maximizes system integration . Commitment from all parties
External . Taps into existing expertise . Cost-not a one-time cost; little Development . Offers a variety of external payback in the form of
internalization services of learning
. Gets up to speed quickly . Cookie-cutter solutions--vendors using same ideas and formats over
and over again . Difficulty monitoring and
controlling . Service limitations--advantages
gained through flexible partnering may be offset by the necessary to monitor and control those relationships
Major Strengths Majors Weaknesses
110
E-commerce Development Options --Their Strengths and Weaknesses (continued)
Partnering . Offers variety . Lack of experience-partners may be
. Gets up to speed quickly overextended; too little time for each . Allows flexibility clients
. Lack of experience-experience of partners in new technologies
possibly limited, raising risk concerns . Cost- integration costs, monitoring
costs, and cost control issues
Major Strengths Majors Weaknesses
Information System Department
Internal R&D Team
(Skunks Works)
Partnering Mode
E-C systemsinfrastructure
Corporate Ownership & Leadership
InternetSystems
DevelopmentCompany
Internal Customer
Added Value
ExternalCustomer
AddedValue
INTERNAL
EXTERNAL
Internal development route External development routePartnering route Request for proposal System deployment
ProcessIntegratio
n
Figure 8.1: Dimensions of Corporate Internet Development
Figure 8.2 Determinants of Internet Development Souring Options
PositiveLeadership
Proprietary LeadershipRequirement
FunctionalIntent is Clear
Development speedRequirement
Infrastructure in Place
In-house ExpertiseAvailable
E-commerceStrategy Development
Create ExecutiveLevel Awareness
Internal Development
Clarity FunctionalIntent
Partner
Create Infrastructure toAccommodate functional
intent
yes
yes
yes
yes
yes
no
no
no
no
no HighlyTime
sensitive
No time Sensitivity
- Internal developmentIssues:training&interimSolutions- External developmentIssues:outsource&monitor
OPTIONAL
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Four Hosting Options 1. Dedicated hosting
the company outsources its requirements to a Web hosting except that the system is located on a dedicated server.
2. Shared hosting an organization outsources the storage,
maintenance, and monitoring of its system to a Web hosting company. Its system is located on a shared server.
114
Four Hosting Options (continued)
3. Internal hosting a company stores, maintains, and monitors its
own systems at its own internal data center. 4. Colocation
a company stores, maintains, and monitors its own information and systems, but utilizes the services of a Web hosting company to store the server.
115
Factors for Making a Hosting DecisionMetrics relating to site performance (from IBM): Performance Scalability Availability Reliability Simplicity Integration Security
116
Figure 8.3 Building an End-to-End Response Time
Application Design
End-to-EndResponse Time
Web TrafficProfiles
Web PageDesign
Performance& Capacity
ServerConfiguration
NetworkTopology
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Internet Strategy Effectiveness –A Scorecard Approach
The Internet and e-Commerce presents executives with a new variant on an old problem - “What am I getting out of this technology
investment?”
Ch. 9
118
Internet Strategy Effectiveness –A Scorecard Approach (continued)
Successful CEO-CIO teams should understand the value of an activity-based approach to IT ROI analysis 1. The creation of an ROI value criteria 2. Creation of a metrics program to monitor the ROI
value criteria 3. Data capture 4. Actual ROI analysis from the metrics data
119
Approach of selling online or just advertising the site to reinforce the brand 1. Determine forces of internal and external to the
organization that influence the organization’s e-Commerce strategy formulation.
2.Create a metrics program based on the use of value criteria in the form of an Internet effectiveness scorecard (use of activity-based ROI analysis).
3. Determine the effectiveness of the value criteria at the ownership levels, the process levels, and the transactional levels.
Figure 9.1: Forces in Strategy Formulation
Forces Externalto the
Organization
MarketspaceRivals
Internet SiteIntegration withExisting Serviceor Manufacturing
Process
Metrics
Ownership
Development
Customer
CustomerE-commerce
Site Interaction
CustomerMarketspaceInteraction E-commerce
Environment
E-commerceSite Feedback
StakeholderInputs
SystemConstraints
Forces Internalto the
Organization
StrategicGoals
CustomerDynamics
MarketspaceForces Stakeholder
Inputs
N
Develop Metrics program
-What does the customer expect?-How does this relate to our
overall strategy?-Channel considerations
-Transaction - versusinformation-based products
Manufacturing/Service Product Ownership Focus Group
Create or updateInternet presence
Create or updateInternet presence
Creation of internet strategyEffectiveness Scorecard
Create metrics for internetEffectiveness Scorecard
Monitor Metrics
E-value map analysis Analysis ofInternet Effectiveness scorecard
Against E-strategy
Financial ROI Analysis Process ROI Analysis
Value Criteria
Financial Ownership FocusGroup
Start Point
Initial vanity page
Figure 9.2Creation of an E-commerce Metrics Program
Updatemetrics
Updatemetrics
UpdateValue Criteria
UpdateValue Criteria
122
Internet Effectiveness Scorecard The scorecard is divided into the following
seven sections: Financial impact Competitive Leadership Brand Service Market Technology Internet Site Metrics
Table 9.1 Effectiveness Rating ScaleScale Effectiveness Description
1 Ineffectiveness Had a strongly negative impact on reaching the goals(s) the organization was trying to achieve23 Negative Had a negative impact on reaching the goal(s) the organization was trying to achieve45 Neutral Had no impact on reaching the goal(s) the organization was trying to achieve67 Positive Had a positive impact on reaching the goal(s) the organization was trying to achieve8910 Highly effective Had a very positive impact on reaching the goal(s) the organization was trying to achieve
TM -123
ΣER/5=
1. FinancialImpact
Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Was your strategyeffective as a mechanismfor reducing costs?
Was your strategyeffective as a mechanismfor generating revenue?
Was your strategyeffective as a mechanismfor transferring revenuesto a low-cost channel?
Was your strategyeffective as a mechanismfor increasing marketshare?
Was your strategyeffective as a mechanismfor increasing transactionvolume?
TM -124
2.CompetitiveLeadership
Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Was the effectiveness of yourdevelopment increased bythe involvement and supportof the CEO, CIO, or othersenior executive from theoutset?
Did the technologyeffectively add value to yourcustomers through provisionof information services?
Were the organizational andtechnology strategy planseffectively aligned?
Was our approach to thesourcing of the developmenteffective in achieving thegoal of rapid systemdeployment?
Did the Web technologyeffectively reduce the costsassociated with updating ourcustomers’ informationrequirements?
TM -125
ΣER/7=
Continued
2.CompetitiveLeadership
Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Did the technologyeffectively allow theorganization to leverage itsexisting brand, products,and strategy?
Is the technology effective inallowing the organization toget closer to the customer(and/or attain wider marketcoverage)?
TM -126
3.Brand Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Was being an early mover incombination with highpresence visibility aneffective strategy?
By adding information theproduct to the site, did weeffectively add value to thebranding strategy?
Has brand reinforcementbeen an effectiveintermediate strategy priorto offering online sales andservices?
Is brand reinforcement aneffective strategy where weare prevented from sellingonline?
Is continuous and innovativechange of the informationsurrounding the productsand the organizationeffective in adding value tothe brand?
TM -127
3.Brand Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Is mass customization as anapproach to internetbranding an effectivestrategy for theorganization?
Is the internet an effectivemechanism for facilitatinglow-cost global branding?
As an organization that hasnot created a brand positionon the internet, is itnecessary to create aneffectively as possible, andare we achieving this?
ΣER/8=
Continued
TM -128
4. Service Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Are established strategies ofcustomer service stillapplicable and in effect?
Is the effectiveness ofinternet service strengthderived from the addedinformation provision to thecustomer on the customer’sterms?
Is the organization’s internetcustomer service effective inbuilding a significantaffinity relationship?
Does the internet servicestrategy provide an effectivelow-cost quality servicechannel opportunity with aglobal reach?
Must an effective e-mailchannel strategy be definedand planned for in advance,and did we achieve this?
TM -129
4. Service Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Must an effective virtual callcenter (at the internet site)be defined well in advanceof its potential implications,and did we achieve this?
ΣER/6=
Continued
TM -130
5.Market Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Did we develop an effectiveinternet strategy prior todeveloping a web presence?
Did we develop an effectiveIT architecture to cope withand integrate the changes tothe organization caused bythe Web presence?
In order to compete in theinternet space effectively,was it necessary to align theinternet strategy with theoverall business strategy,and did we achieve this?
Did our organization(regardless of product) needan effective internetpresence that offered valueto the customer (visitor),and did we achieve this?
TM -131
5.Market Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Do changes in internetmarketing strategy need tobe avoided to allow thecustomer to have effectiveand consistent vision of theorganization, and do weachieve this?
Did we effectively achieve acoherent internet marketingstrategy that is necessaryacross all brands?
To be effective do theproduct marketing andbranding strategies needconsistency in the eyes ofthe customer, and so do weachieve this?
To be effective in gettingcloser to the customer, doesthe internet strategy have tochange over time to meetthe changing demands of thecustomer and the market,and do we achieve this?
Continued
TM -132
5.Market Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Do changes in internetmarketing strategy need tobe avoided to allow thecustomer to have effectiveand consistent vision of theorganization, and do weachieve this?
Did we effectively achieve acoherent internet marketingstrategy that is necessaryacross all brands?
To be effective do theproduct marketing andbranding strategies needconsistency in the eyes ofthe customer, and so do weachieve this?
To be effective in gettingcloser to the customer, doesthe internet strategy have tochange over time to meetthe changing demands of thecustomer and the market,and do we achieve this?
Continued
TM -133
5.Market Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
As a products-basedcompany, was the strategyeffective in allowing newinformation based productsto be offered through thelow-cost channel?
ΣER/13=
Continued
TM -134
6.Technology Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
Did the technologyinfrastructure provide aflexible base toaccommodate marketchange?
Were the technology partnerschosen responsive?
Do the front office and backoffice systems interfaceeffectively?
What is the mean timebetween failures?
What is the averagebandwidth requirement?
What is the mean time toupgrade a serve installation?
ΣER/6=
TM -135
7.Internet SiteMetrics
Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
The number of hits permonth (as a measure ofcustomers’ interest and sitepotential value)?
The number of purchase perregistered customer permonth?
The average purchase sizeper transaction?
The length of time aregistered customer spends(as a measure of siteinformation value)?
The repeat visit rate byregistered users (as ameasure of site value)
TM -136
7.Internet SiteMetrics
Metric ForecastInitial Goal
ActualResults
IndustryBestPractice
EffectivenessRating
The purchase/hit rate (as anindicator of interestconverted to revenue)?
Other (any other metrics youuse for measuring theeffectiveness of your site)
Description:
ΣER/7=
Continued
TM -137
Level I : Senior Strategic Management Group
Owner ValueCriteria
Metric Target Results ProjectedChang
Effectiveness Rating
CEO Branding Brandequity
Analysis
Top 100brand
ranking
Firstyear of
operation – Rank
164
7% 7
CIO Security MTBF 100%coverage
99.65% -0.05% 9
CFO Revenues
$ perregisteredcustomer
$15 $7 4% 6
Level II: Regional Planning Group
Owner Report Valuecriteria
Metric Target Results Projectedchange
EffectivenessRating
DirectorEuropeanDivision
CEO Brand Priceconsistencywithcompetitors
3%variance
5% 0.8% 8
DirectorNorthAmericanDivision
CEO Brand Customerserviceindex
96% 94% 1.0% 7
DirectorLatinAmerica
CEO Brand Marketpenetration
34% 36% 2% 7
TM -138
Level III: Country Managers Planning Group
Owner Report Valuecriteria
Baseline Target Results Projectedchange
EffectivenessRating
ManagingDirectorUK
DirectorEurope
Brand Priceconsistency
3%variance
6% 1% 7
ManagingDirectorGermany
DirectorEurope
Brand Priceconsistency
3%variance
4% 0.4% 8
ManagingDirector
DirectorEurope
Brand Priceconsistency
3%variance
3% 0.7% 10
Level IV: Marketing-Automation Strategy Group
Owner Report Valuecriteria
Baseline Target Results Projectedchange
EffectivenessRating
Director ofMarketing
MD UK Brand Priceconsistency
85% ofcustomersacknowledgepriceconsistency
78% 13% 7
CIO MD UK Brand Priceconsistency
100%competitorsscanned andthe pricingupdated athome site
97% 3% 8
VPInternet-Partnerrelations
MD UK Brand Priceconsistency
100% dataandinformationexchange withpartners
100% 0% 10
TM -139
Level IV: Marketing-Automation Strategy Group
Owner Report Valuecriteria
Baseline Target Results Projectedchange
EffectivenessRating
Director ofMarketing
MD UK Brand Priceconsistency
85% ofcustomersacknowledgepriceconsistency
78% 13% 7
CIO MD UK Brand Priceconsistency
100%competitorsscanned andthe pricingupdated athome site
97% 3% 8
VPInternet-Partnerrelations
MD UK Brand Priceconsistency
100% dataandinformationexchange withpartners
100% 0% 10
TM -140
PreviousCycle
PresentCycle
PreviousCycle
PresentCycle
PreviousCycle
PresentCycle
1.1. Logisticson-timedelivery in-bound
97% 97.2% 96% 97% 89 91
1.2.Logisticson-timedelivery tocustomer
67% 67% 64% 63% 65 67
1.3.Returnstomanufacturer1.4.Out-of-stockrequesteditems
4%
5%
8%
7%
7%
8%
9%
12%
NA
NA
NA
NA
Table 9.2 E-value Map - Example
Baseline Results CSI’Process Value Criteria Metrics
1. Perishable ProductsProduct
E-value Map:Strategic Perspective
CSI=customer satisfaction index
TM -141
142
The E-value Map Ownership Value Map Ownership Levels Process Value Map Results are assessed against the forecasts, and the
strategy and systems are modified based on effectiveness and performance.However, the correlation between the business objectives and the metrics by which they are measured must be carefully assessed.
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143
Waves of the Future – Issues that will Shape the Formulation of Strategy: Waves of Change
To create a business model, it is necessary to learn from the past but to enable future issues to be debated within their context in a way that they do not become dated and redundant.
However, executives and managers developing their corporate strategy from these business models must tune them to meet the needs of their own corporate environments.
Ch. 10
144
Figure 10.1 The Seven Key Drivers of Change
Government& PoliticalChanges
The AgileE-commerceOrganization
ServiceChanges
MarketChanges
ExternalRelationship
Changes
TechnologyChanges
BrandingChanges
Technology
Most important factorsLeadership factorsMost dynamic change agent
145
Future Waves 1. Develop R&D programs that link pure
and applied research with key elements of the organization’s structure and strategy.
2. Harness the power of others’ technologies. Even if it is necessary to pay a license fee or purchase a package, immediate access to the technology outweighs the “build and play” model.
146
Future Waves (continued)
3. Power comes through consortium relationships and the collective knowledge that brings. To extend the technology vision of the corporation, two forms of consortium can be exploited: open-industry-based and closed-proprietary consortia; utilized intelligently this assists in the prevention of technology isolation.
147
Future Waves (continued)
4. Develop a wireless dimension to your e-Commerce online strategy. Imagine a customer anywhere on the planet looking for your product by wireless device and wishing to complete the purchase cycle. Could you fulfil the order?
5. Develop a strategy to interact with the intelligent agent of users in the future. Identifying sales leads, negotiating for the sale, and fulfilling the obligation with less human interaction on the part of the customer.
148
Questions executives are facing …(global, wireless, and mobile)
the positioning of their advertising on a cell phone display
their advertising-based revenue models for wireless devices
their collection and payment mechanisms for a global customer whose only contact point is an IP address
how digital product layering will be rolled out
149
Future Waves (continued) 6. Develop a multicomponent strategy for the
creation and protection. Focus on brand leadership, brand stability, and global market positioning through proactive corporate policies.
7. Successful nimble and agile organizations will rely on speed to market and continuous innovation rather than protection under the law.
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150
Brand Changes Key to managing brand in the future will be the
determination of and management of brand equity - a financially related value on the customer-based equity of brand images and associations.
Four major drivers of brand equity Brand name awareness Brand loyalty Perceived quality Brand differentiation
151
Brand Changes (continued)
While developing branding strategy, the organization should consider: Will the technology divert the organization from our
brand position? Will the customer change her perception of our
products if we change our customer relationship management
What are the implications of the technology on the existing traditional brand drivers?
152
Future Waves (continued)
8. Change is the only constant but, to keep the customer-organization constant, the organization and its use of technology must change constantly.
9. An e-consortium will develop to supply the customer-centric environment with all its needs, focusing multiple organizations and their products through one information hub.
153
Figure 10.2 Internet Service Value Chain(Service Changes - Evolving to Meet the Changing
Expectations of the Customer)
CustomerSupport
(DuringPurchase)
CustomerFulfillment
(PurchaseDispatch)
Customer Service Channel
CustomerAcquisition
(PrepurchaseSupport)
CustomerContinuance
Support(Postpurchase)
N
The development and execution of a successful strategy in each of the Internet service value chain segments is vital for any organization wishing to operate all or part of its business online The value chain models the development of an organization’s
relationship with a customer over time
BrandReinforcement
154
Future Waves (continued)
10. The status of agile enterprise is not necessarily on the evolutionary road for all of today’s organizations.
11. Information hubs of a specialist nature will cut down on the search requirements and effort needed to locate data as the Web continues to expand.
155
Figure 10.3 Three Factors Impacting Market Change
MarketSegmentation
GlobalMarket
Development
MarketHubs
MarketDynamics
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156
Future Waves (continued)
12 Intergovernmental issues on privacy, access to information, and free trade will become more important as e-C becomes increasingly global and lucrative.
13. The battle for ownership and control over the virtual intercorporate value chain will become a new venue for competitiveness.
157
Future Waves (continued)
14. International treaties and trade groups will become less potent as the customer takes control of markets through the Internet.
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158
Future Directions:Agile and e-Organization Confluence The virtual economy will reshape the very nature
of organizations, forcing them to transform themselves from rigid structure to agile structures.
The organizations will move from competitive strategies based on scale of economy to competition based on low-volume, mass-customized production and from vertical and horizontal structures to polymorphic structures composed of communities of collaborative e-Commerce.
159
Commentary on the Road Ahead
No organization is immune to the contact and presence of the Internet and the technology that surrounds it.
Those organizations that are successful going forward will be those who manage to balance their strategy in all of its areas; those organizations that are very successful will be those that manage not only to live within the waves of change but to influence them.
160
THANKS and GO for your e-Era !!