Strategy for B2B

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Strategy for B2B

• Anna E. Story
• INBS 510

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Strategy Need

• IBM E-Biz Strategy
• ROI
• practical
• 7 Initiatives
• EC
• e-care for customers
• e-care partners
• e-care for influencers
• e-care for employees
• e-procurement
• e-marketing communications

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Schwabs Strategy

• online initiative
• lower transaction price
• first mover advantage
• Value Proposition
• targeted existing
• key benefits
• supportive rationale
• Financial Model
• revenue
• value
• growth

4
Strategy Essentials

• broad based formula for how a business is going
  to compete, goals, plans and policies
• Levels
• corporate
• IT
• EC strategy
• EC functional

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Types of Strategy

• strategic planning
• strategic response
• strategic innovation

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Figure 16-2The Landscape of EC Strategy

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Strategy Initiation

• mission statements
• Industry assessment
• company assessment
• SWOT analysis
• competitive intelligence
• review competitors
• newsgroups
• exame public docs
• ask customers
• research companies
• chat rooms

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Industry and Competitive Analysis

• Monitoring, evaluating, disseminating of
  information from the external and internal
  environments
• SWOT Analysis
• Strengths
• Opportunities
• Weaknesses
• Threats

SWOT
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Figure 16-4 SWOT Diagram
INTERNAL FACTORS
Strengths (S)
Weaknesses (W)
EXTERNAL FACTORS
SO Strategies Generate strategies here that use
strengths to take advantages of opportunities
WO Strategies Generate strategies here that take
advantage of opportunities by overcoming
weaknesses
Opportunities (O)
ST Strategies Generate strategies here that use
strengths to avoid threats
WT Strategies Generate strategies here that
minimize weaknesses and avoid threats
Threats (T)
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Competitive Intelligence on the Internet

• Internet can play a major role as a source of
  competitive information (competitive
  intelligence)
• Review competitors Web sites
• Analyze related newsgroups
• Examine publicly available financial documents
• Ask the customersaward prizes to those who best
  describe your competitors strengths and
  weaknesses

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Issues in Initiation

• First mover or follower?
• advantages and disadvantages
• p 687 Turban
• Why need EC?
• Separate online from offline?

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Should You Have a SeparateOnline Company or Not?

• Advantages
• Reducing or eliminating internal conflicts
• Providing more freedom to management in pricing,
  advertising, etc.
• Can create new brands quickly
• Take the e-business to an IPO and make a fortune

• Disadvantages
• May be very costly and risky
• Collaboration with off-line business may be
  difficult
• Lose expertise of business functions unless you
  use close collaboration

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Critical Success Factors

• How can I use the info I have about individual
  customers to make it easier for them to do
  business with me?
• How much does it cost me to provide services that
  customers could get by themselves over the
  Internet?
• What help can I give customers by using the
  experience of other customers or the expertise of
  my employees?
• Will I be at a significant disadvantage if my
  competitors provide these capabilities to
  customers before I do?

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EC Opportunities

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

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EC Opportunities (cont.)
Approaches to finding individual EC initiatives

• Problem-drivenattempt to solve a problem such
  as
• Excess inventory
• Delivery delays
• Technology-driventrying to use existing
  applications
• Find problems no one knew existed
• Used by first movers

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EC Opportunities (cont.)
Approaches to finding individual EC initiatives
(cont.)

• All can fail
• Market-drivenwaiting to see what the competitors
  will do
• Fear or greed-driven
• Afraid if they do not practice EC they will be
  big losers
• Think they can make lots of money going into EC

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Figure 16-5Approaches for Finding EC
Opportunities
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Cost-Benefit and Risk Analysis

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

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Cost-Benefit and Risk Analysis (cont.)

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

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Cost-Benefit and Risk Analysis (cont.)

• How to conduct an
• e-business case
• Develop goal statement
• Set measurable goals
• Develop short- and long-term action plans
• Gain approval and support

• Revenue model
• Properly planned revenue model is a critical
  success factor
• Revenues from sales depend on customer
  acquisition cost and advertisement
• Must be figured into the analysis

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Cost-Benefit and Risk Analysis (cont.)

• It is difficult to justify EC investment due to
  many intangible variables
• Methods used for analysis
• Value analysis and proposition
• Rate of return of investment (ROI) and/or
  discounted cash flow
• Real options valuation and analysis
• Management by maxim
• Information economics

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Cost-Benefit and Risk Analysis

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

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Cost-Benefit and Risk Analysis (cont.)

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

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Cost-Benefit and Risk Analysis (cont.)

• How to conduct an
• e-business case
• Develop goal statement
• Set measurable goals
• Develop short- and long-term action plans
• Gain approval and support

• Revenue model
• Properly planned revenue model is a critical
  success factor
• Revenues from sales depend on customer
  acquisition cost and advertisement
• Must be figured into the analysis

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Cost-Benefit and Risk Analysis (cont.)

• It is difficult to justify EC investment due to
  many intangible variables
• Methods used for analysis
• Value analysis and proposition
• Rate of return of investment (ROI) and/or
  discounted cash flow
• Real options valuation and analysis
• Management by maxim
• Information economics

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Value Analysis and Proposition

• A Value Analysis Approach
• Value chaina series of activities a company
  performs to achieve its goal(s)
• Value added
• Contributes to profit and enhances the asset
  value as well as the competitive position of the
  company in the market
• To create additional value using EC channels, a
  company should consider the competitive market
  and rivalry in order to best leverage its EC
  assets
• (Customers value proposition)

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Value Analysis and Proposition (cont.)

• Value Analysis Questions
• Representative Questions for Clarifying Value
  Chain Statements
• Can I realize significant margins by
  consolidating parts of the value chain to my
  customers?
• Can I create significant value for customers by
  reducing the number of entities they have to deal
  with in the value chain?

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Value Analysis and Proposition (cont.)

• Value Analysis Questions (cont.)
• Representative question for creating new values
• Can I offer additional information of transaction
  services to my existing customer base?
• Can I use my ability to attract customers to
  generate new sources of revenue, such as
  advertising or sales of complementary products?

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Return on Investment (ROI)

• Return on Investment and Risk Analysis

• A ratio of resources required and benefits
  generated by an EC project
• Includes both quantifiable items (cost of
  resources, computed monetary savings) and
• Non-quantifiable items (intangibles)
• Some intangible benefits
• Effective marketing channel
• Increased sales
• Improved customer service

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Return on Investment and Risk Analysis

• IT values
• Financial valuesmeasurable to some degree
• Strategic valuescompetitive advantage in the
  market and benefits generated by business
  procedures
• Stakeholder valuesreflections of organizational
  redesign, organizational learning, empowerment,
  information technology architecture of a company,
  etc.

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Return on Investment and Risk Analysis (cont.)

• IT risks risks
• Competitive strategy riskexternal, due to joint
  venture, alliances or demographic changes among
  others
• Organizational risk and uncertaintyinternal to
  company

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Issues in Strategy Formulation (cont.)

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

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Issues in Strategy Formulation (cont.)

• How to handle conflict between off-line and
  online businesses in a click-and-mortar situation
• Clear support of top management
• Use of innovative processes that support
  collaboration
• Clear strategy of what and how
• http//digitalenterprise.org/channels/channel.html
  Channel Conflict

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12 Truths About How the Internet Really Works

• Internet not as disruptive to business as we
  thought
• If it doesnt make cents, it doesnt make sense
• Time favors incumbents
• Making a market is harder than it looks
• There is no such thing as Internet time
• Branding is not a strategy

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12 Truths About How the Internet Really Works
(cont.)

• Entrepreneurship cannot be systematized
• Investors are not your customers
• Internet still changes everything
• Internet changes your job
• Distinction between Internet companies and
  non-Internet companies is fading fast
• Real wealth creation is yet to come

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Table 16-3Critical Success Factors for EC