Dickson K.W. Chiu

1
COMP7880 E-Business Strategies Introduction

• Dickson K.W. Chiu
• PhD, SMIEEE, SMACM, Life MHKCS
• Jelassi Enders Chapter 1-2

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Tentative Topics

1. Introduction and overview
2. External and internal analysis
3. Strategy options in e-business markets
4. Sustaining competitive advantage
5. Exploiting new market spaces
6. Strategy for internal organization
7. Strategy for interaction with suppliers
8. Strategy for interacting with customers
9. Creating effective web presence
10. Mobile Commerce
11. Web 2.0 Environment and Social Networks

3
Scope of Electronic business
e-business
Electronic commerce
Mobile e-commerce
Source Adapted from D. Chaffey, 2002, p. 9.
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The focus of the cases is on corporate level and
business unit strategy
Corporate- level strategy
Corporation
Business unit strategy
Business unit A
Business unit B
Business unit C
Operational strategy
RD
Production
Etc.
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Different stages of technological revolutions as
their diffusion increases
INSTALLATION PERIOD
DEPLOYMENT PERIOD
Previous great surge
5
Maturity
4
Synergy (golden age')
Crash
Degree of diffusion of the technological
revolution
3
2
Frenzy (gilded age')
Next great surge
Irruption
1
Time
Next big bang
Big bang
Source Adapted from C. Perez, 2002, p. 48.
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Major technological revolutions in history
INSTALLATION PERIOD
DEPLOYMENT PERIOD
2
1
4
3
5
'Crash'
Technological revolution (core country)
'Irruption'
'Frenzy'
'Synergy'
'Maturity'
The Industrial Revolution (Britain) Age of
steam and railways (Britain, then spreading to
Continental Europe and the USA Age of steel,
electricity, and heavy engineering (USA and
Germany overtaking Britain) Age of oil,
automobiles and mass-production (US, then
spreading to Europe)
1770s and early 1780s 1830s 18751884
19081920
late 1780s and early 1790s 1840s 18841
893 19201929
crash in 1797 crash in 1847 crash in
1893 crash in 1929
17981812 18501857 18951907 19
431959
18131829 18571873 19081918 19
601974
Timeline
Source Adapted from C. Perez, 2002, p. 57.
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e-business and NASDAQ in the past decade
3
2
1
4
'Stock market crash'
'Synergy'
'Grassroots of e-business'
'Rise of the Internet'
45
NASDAQ Points
1995
1996
1997
1998
1999
2000
2001
2002
2003
1994
2004
2005
2006
2007
Year
Launch of Amazon.com
Source NASDAQ quotes taken from Factiva.com.
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Definitions of strategy

• Gerry Johnson and Kevan Scholes - the direction
  and scope of an organization over the long-term,
  which achieves advantage for the organization
  through its configuration of resources within a
  changing environment to the needs of markets and
  fulfill stakeholder expectations.
• Alfred Chandler - the determination of the basic
  long-term goals and objectives of an enterprise,
  and the adoption of courses of action and the
  allocation of resources necessary for carrying
  out these goals.
• Bruce Henderson - the deliberate search for a
  plan of action that will develop a businesss
  competitive advantage and compound it.
• Michael Porter - the strong focus on
  profitability not just growth, an ability to
  define a unique value proposition, and a
  willingness to make tough trade-offs in what not
  to do.

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Key focus of strategy
Strategy is concerned with the long-term
direction of the firm.
Strategy deals with the overall plan for
deploying the resources that a firm possesses.

Strategy entails the willingness to make
trade-offs, to choose between different
directions and between different ways of
deploying resources.
Strategy is about achieving unique positioning
vis-à-vis competitors.
The central goal of strategy is to achieve
sustainable competitive advantage over rivals and
thereby to ensure lasting profitability.
Source See also G. Johnson and K. Scholes
(2002), pp. 39-46.
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Goal of e-business strategy
Formulation
Environment
Goals
Marketpositioning
Competitiveadvantage
(Long-term)success
Resourceexploitation
Resources
Implementation
Source Adapted from H. Hungenberg (2006), p. 83
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3 main steps of e-business strategy
Mobile e-commerce strategy
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E-business strategy
Strategic analysis
Strategy implementation
Strategy formulation
3
Externalanalysis
5
9
Strategyoptions
Internal organisation
Opportunities/ threats
6
7
10
13
Sustaining competitive advantage
Implementation
Exploring new market spaces
Interaction with suppliers
Strengths/ weaknesses
4
Internalanalysis
11
8
Creating and capturing value
Interaction with users/customers
12
E-business strategy formulation
Key environmental/industry developments
Opportunities
Threats

• Do we havethe strengths to seize
  possibleopportunities?

• Do we havethe strengths tofend off possible
  threats?

Strengths
Firmcharac-teristics

• To which threats do our weaknesses expose us to?

• Which opportunitiesdo we miss becauseof our
  deficits?

Weaknesses
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Net Commerce and Strategy

• 4 phases of Net commerce evolution
• not a single step!

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CommerceNets Views

• An industry consortium at www.commerce.net
• Buying and selling information, products, and
  services (e-Commerce)
• The use of inter-networked computers to create
  and transform business relationships (e-Business
  and e-Enterprise)
• Internally transfer and share information
  through intranets to improve decision-making and
  eliminate duplication of effort
• Externally part from transactions, also built on
  building, sustaining, and improving relationships

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Reverse Engineering an implementation Vending
Machine On-line

• What are transformed?
• How are they transformed?
• Why do they need to be transformed?
• Who will be affected in what ways?

Transforming a vending machine
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e-Business What are transformed?

• Form of information and documents
• E.g., invoice, customer information, contract,
  product catalog, company news, payment records,
• Processes for managing, analyzing and using them
• Functional perspective accounting, sales and
  marketing, production, design, human resource,
• Organizational perspective Operational,
  Knowledge, Management and Strategy

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Vending Machine Example

• e-Commerce Payment
• e-Business
• Machine -gt CocaCola warehouse for refill
• CRM for where to put the machine and what to be
  sold
• Mobile payment solutions

Transforming a vending machine
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Evolving Aspects in e-Transformation

• Business Models
• What is to be accomplished?
• e-Application Categories
• How to accomplish ?
• e-Application Functionalities
• What is offered that helps to accomplish ?
• To support the vision and strategy of the company
  
• A Web-based system has no value by itself if it
  is not developed with a strategic plan
• gt Strategic Information System

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Focus of this course

• NOT how to implement EC / EB functions
• BUT to
• ANALYZE the business requirements in the
  perspective of strategic managment
• FORMULATE suitable business models strategies
• CHOOSE suitable IT options (especially Web-based
  ones) to implement the strategies

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Reference
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Brochureware

• Business Model (B2C)
• Use the net as
• key medium for global marketing
• a low-cost repository of product and service
  information ? static documents and simple
  multimedia
• Customer interaction
• reading text
• view pictures
• Transactions are performed over traditional means
• Now, we still go the shops to buy most of our
  need

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e-Commerce

• Focus on consumer transactions and interactions
  over the Internet
• Business Model
• buying and selling to consumers online (B2C)
• Characterized by
• the .com mania - lots of new companies operating
  online
• content-aggregation business model - focus on
  consumer
• founder and situation driven
• Some success factors
• Branding
• Marketing
• Personalization of service
• Creation of customer community

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e-Commerce Functionalities Examples

• e-Tailing and Consumer Portal (CDNOW)
• online catalogs, personalization, advertising,
  shopping carts, and online communities
• Bidding and Auctioning (eBay)
• online catalogs, bid boards, account management,
  and notification
• Consumer Care and Management (e-Trade)
• personalization, self-service, immediacy, and
  information
• Electronic Bill Payment (ATT)
• bill consolidation, analysis and reporting,
  payment processing, and integration

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e-Business

• Business Model
• Focus on B2B applications over the Internet
• evolve from well-established brick-and-mortar
  companies seeking process improvement
• Characterized by
• focus on an organizations core competencies
• process aggregation oriented business model
• process-driven also technology-driven
• Some success factors
• create and integrate the right processes
• agile applications
• ability to integrate applications and data
• right organizational structure
• Means of overcoming political obstacles

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e-Business Functionalities Examples

• Virtual Marketplace (Dell)
• Catalog, buying tools, integration, and payment
  option, ..
• Procurement Resource Management (MasterCard)
• Request for info, request for proposal,
  requisitioning, purchase orders, payment, and
  supplier management
• Extended Value Chain (FedEx)
• Demand and supply planning, logistics, and
  production planning
• Customer Relationship Management (HP)
• Self-service, solution-center, personalization,
  and account management functionalities

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SCM vs ERP vs CRM
Supply Chain Mgmt
Customer Relationship Mgmt
Enterprise Resources Planning
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e-Enterprise (1)

• Convergence of B2C and B2B functionalities for
  those who serve both market segments
• New value chain ? Click and Mortar
• combining traditional bricks-and-mortar assets
  with the efficiency of cybermediation
• Co-opetitive virtual organizations

Demand side consumer retailing and customer
management
Supply side Procurement of raw material
cybermediation
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e-Enterprise (2)

• Complex combinations of internal and external
  business processes and relationships with

Suppliers
Customers
Distributors
Company A
Partners
Competitors
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e-Enterprise (3)

• Business Model (B2C B2B)
• Based on people (role) aggregation
• Applications
• Focused on mission-critical, inter-organizational
  business processes
• CEO drives organizational changes
• Results come out via iterative and methodological
  efforts using technology (as an enabler and as a
  commodity )

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e-Enterprise (4)

• Value Proposition
• more than manufacturing techniques or prime
  location outlets
• Speed and Agility
• Gained by leveraging existing asset base through
  the Net
• Example 1, TimKin Corp. (bearings producer)
• Self-service answers to customer about product
  availability and price (CRM) through linkage to
  the back-end inventory database -gt 15 percent
  service reps moved to sales
• Example 2, AutoNation (automobile dealership
  network)
• Use an on-line infrastructure to channel leads to
  its physical infrastructure of nationwise
  dealership.