E(lectronic)-Business

Transcription

1 M.Sc. Major International Management: E(lectronic)-Business E-business strategy (#3) Dipl.-Ök. Nadine Guhr # 1 Lecturers IWI Contact information Prof. Dr. Michael H. Breitner Tel.: +49- (0) or +49 (0) Mail: breitner@iwi.uni-hannover.de Office: I/452 Surgery: Tuesday 2-6 pm a.o.a. Dipl.-Ök. Nadine Guhr Tel.: +49 (0) Mail: guhr@iwi.uni-hannover.de h@i i ih Office: I/429 Surgery: on appointment Dipl.-Ök. Lubov Lechtchinskaia Tel.: +49 (0) Mail: lechtchinskaia@iwi.uni- hi i i i hannover.de Office: I/427 Surgery: Wednesday 2-5 a.o.a. # 2 1

2 Having a good grasp of E-Business The content for this lectures will be made available via: IWI-Homepage (slides as PDF-Download) Stud.IP (Rubric E-Business Business, PDF-Download) Download) Videostream (available as.flv or Lecturnity format; Links on the IWI-Homepage) My proposal, for the optimal use of literature and slides: 1. Plenty of time and interested: Keep the Face-to-face meetings, rework the video-files, work the primary literature complete over again, work through the slides, maybe secondary literature review (optional) 2. Medium time availability and interested: rework the videos and slides, focus the slides reffered to as relevant or especially important by the instructor, please read the primary literature again 3. Little time and interest: rework the video and slides, in case of doubt or misunderstanding obligatory memorization by rote and group discussion # 3 Basic Books E-Business ( Stud.IP) E-Business and E-Commerce Management Dave Chaffey Prentice Hall; 4 th edition 2009 ISBN: What approach to e-business strategy should you follow? How much do you need to invest in e-business? Which processes should be your priorities? Relevant chapters for today: Chapter 1: pp Chapter 3: pp Chapter 5: complete # 4 2

3 Topic today () Introduction and E-business strategy # 5 Learning outcomes Define the meaning and scope of e-business and e-commerce and their different elements. Summarize the main reasons for adoption of e-commerce and e-business and barriers that may restrict adoption. Outline the ongoing business challenges of managing e-business and e- commerce in an organization. Follow an appropriate strategy process model for e-business. Apply tools to generate and select e-business strategies. Outline alternative strategic approaches to achieve e-business. # 6 3

4 E-commerce defined All electronically mediated information exchanges between an organization and its external stakeholders. Different perspectives for e-commerce: A communication perspective the delivery of information, products or services or payment by electronic means. A business process perspective the application of technology towards the automation of business transactions and workflows. A service perspective enabling cost cutting at the same time as increasing the speed and quality of service delivery. An online perspective the buying and selling of products and information online. # 7 The distinction between buy-side and sellside e-commerce Source: Da 4 th Edition ave Chaffrey, E-Business and E-Comm merce Management,, Marketing Insights Limited 2009 Buy-side e-commerce: Transactions between a purchasing organisation and its suppliers. Sell-side e-commerce: Transactions between a supplier organization and its customers. # 8 4

5 Different types of sell-side e-commerce Transactional e-commerce sites: These enable purchase of products online. The main business contribution of the site is through sale of these products. The sites also support the business by providing information for consumer that prefer to purchase products offline. These include retail sites, tavel sites and online banking services. Services-oriented relationship-building web sites: Provide information to stimulate purchase and build relationships. Products are not typically available for purchase online. Information is provided through the web site and e- newsletter to inform purchase decisions. The main business contribution is through encouraging offline sales and generating enquiries or leads from potential customers. Brand-building sites: Provide an experience to support the brand. Their main focus is to support the brand by developing an online experience of the brand. Portal, publisher or media sites: Provide information, news or entertainment about a range of topics. Portal refers to a gateway of information. # 9 Evolution of web technologies Sou urce: Adapted from Spivack (2007) # 10 5

6 Summary and examples of transaction alternatives Source: Dave Chaff 4 th Edition, Marke nagement, rey, E-Business and E-Commerce Man eting Insights Limited 2009 # 11 What is strategy? (1) Strategy defines the future direction and actions of an organization or part of an organization. Johnson and Scholes (2006) define corporate strategy as 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 enviroment to meet the needs of markets and to fulfil stakeholder expectations. Henderson (1989) define strategy as the deliberate search for a plan of action that will develop a business`s competitive advantage and compound dit it. Porter (2001) defines strategy as the strong focus on profitability not just growth, an ability to define a unique value proposition, and a willingness to make though trade-offs in what not to do. # 12 6

7 What is strategy? (2) Strategy vs. Tactic Tactics are schemes for individual and specific actions that are not necessarily related to another. In general, specific actions can be planned intuitively because of their limited complexity. # 13 Derivation of informational added values EAV and MAV (Pousttchi et al. 2003) EAV: Electronic Added Value MAV: Mobile Added Value IAV: Informational Added Value # 14 7

8 Diagram for a structured analysis of dependencies # 15 Typical problems of implementing e-business in traditional organizations Missed opportunities from lack of evaluation of opportunities or insufficient resourcing of e-business initiatives. These will result in more savvy competitors gaining a competitive advantage. Inappropriate p direction of e-business strategy (poorly defined objectives, for example, with the wrong emphasis on buy-side, sell-side or internal process support) Limited integration of e-business at a technical level resulting in silos or information in different systems. Resource wastage through duplication of e-business development in different functions and limited sharing of best practice. For instance, each business unit or region may develop a separate web site with different suppliers without achieving economies of scale. # 16 8

9 Relationship between e-business strategy and other strategies Source: Dave Cha 4 th Edition, Ma Management, affrey, E-Business and E-Commerce M arketing Insights Limited 2009 # 17 Example e-channel strategy: BA asks Have you clicked yet? E-channel strategies: Define how a company should set specific objectives and develop specific differential strategies for communicating with its customers and partners through electronic media such as Internet, and wireless media. Multi-channel e-business strategy: Defines how different marketing and supply chain channels should integrate and support each other to drive business efficiency and effectiveness. ways.com) ine value proposition ( tion (2005) BA communicates its onli Source: Based on Revolut # 18 9

10 Strategy process models for e-business (1) A framework for approaching strategy development! Alternative strategy process models: Jelassi and Enders (2008): E-business strategy framework SWOT summarizing external analysis (e.g. marketplace, customers, competitors); internal analysis (e.g. human, financial and operational) Mission and objectives Strategy formulation to create and capture value through sustaining competitive advantage and exploring new market spaces Strategy implementation including internal organization, interaction with suppliers and users or customers Johnson and Scholes (2006): Parallel corporate strategy model Strategic analysis (environment, resources, expectations, objectives and culture) Strategic choice (generation of options, evaluation of options, selection of strategy) Strategic implementation (resource planning, people and systems, organization structure # 19 Strategy process models for e-business (2) McDonald (1999): Sequential marketing strategy model Situation review (marketing audit, SWOT analysis, assumptions) Goal setting (mission, corporate objectives) Strategy formulation (marketing objectives and strategy, estimate expected results, identify alternative plans and mixes) Resource allocation and monitoring (budget, first-year implementation plan) Smith (1999): Sequential marketing strategy model Situation analysis Objective setting Strategy Tactics, Action, Control # 20 10

11 Matrix for evaluation of external capability against internal capability Figure 5.9 Matrix for ev capabilitysource: Perrott valuation of external capability against internal t (2005) # 21 Basics of competitive strategy Two schools dominate the strategy debate: Market-based view Resource-based view According to: Hungenberg, H., Strategisches Management in Unternehmen (2000, p.6). # 22 11

12 Market-based view Competitive advantage derives from strategic fit with the (external) economic enviroment of the firm (market positioning). According to Börner (2000, p. 817) Sustainable success is determinded by the industry and business unit market structure and the strategic behaviour of the firm within the industry/market. Synonyms to the market-based view: Harvard school Market based approach Outside-in perspective and SCP (Structure-Conduct-Performance) Paradigm # 23 Market-based view according to Porter Strategic positioning theory posits that superior performance is driven by tight linkages among Distinctive value propositions A carefully crafted product-market focus A set of unique value activities value chain/activity system # 24 12

13 Porter`s Five Forces Model Source: adapted with the Schuster, Inc., from COM Industries and Competitor Free Press. All rights rese permission of The Free Press, a Divis sion of Simon & PETITIVE STRATEGY: Techniques for Analyzing rs by Michael E. Porter. Copyright 1980, 1998 by The rved # 25 An evaluation tool relating information to business value An evaluation tool rela organization s use of in 1(low use of informatio Source: Marchand et a ting information to business value nformation on each axis can be ass on) to 10 (high use of information) al. (2002). An sessed from ) # 26 13

14 Example of conversion modelling for an online retailer Source: Dave Chaffrey, E-Business and E-Commerce Management, 4 th Edition, Marketing Insights Limited 2009 # 27 Elements of strategy definition for the e- business Source: Dave Chaffrey, E- ment, 4 th Edition, -Business and E-Commerce Managem Marketing Insights Limited 2009 # 28 14

15 Matrix for evaluating e-business strategy alternatives Source: Dave Chaffrey, E- ment, 4 th Edition, -Business and E-Commerce Managem Marketing Insights Limited 2009 # 29 Decision 1: E-business channel priorities Internet pureplay: A company trading online that has limited or no physical presence such as retail units. Right-channeling: This is a selective adoption of e-channels by business for some products or markets in order to best generate value for the organization according to stakeholder preferences. To reach: The Right Person At the Right Time Using the Right Communications Channel With a Relevant Offer, Product or Message Strategic options for a company in relation to the importance of the Internet as a channel. Source: Dave Chaffrey, E-Business and E-Commerce Management, 4 th Edition, Marketing Insights Limited 2009 # 30 15

16 Decision 2: Market and product development strategies Using the Internet to supp E-Business and E-Comm Limited 2009 port different growth strategies.source e: Dave Chaffrey, erce Management, 4 th Edition, Mark keting Insights # 31 Decision 3: Positioning and differentation strategies According to Chaston (2000) there are four options for strategic focus to position a company in the online marketplace: Product performance excellence: Enhance by providing online product customizing. Price performance excellence: Use the facilities of the Internet to offer favourable pricing to loyal customers or to reduce prices where demand is low. Transactional excellence: A site such as software and hardware e-tailer offers transactional excellence through combining pricing information with dynamic availability information on products listing number in stock, number on order and when expected. Relationship excellence: Personalization features to enable customers to review sales order history and place repeat orders. # 32 16

17 Decision 4: Business, service and revenue models; Decision 5: Marketplace restructuring Decision 4 Business model: A summary of how a company will generate revenue, identifying its product offering, value-added services, revenue sources and target customers. Revenue model: Describe methods of generating income for an organization. Less radical changes to revenue models: Transactional e-commerce sites for example lastminute.com can sell advertising space or run co-branded promotions on site or through their newsletters or lists to sell access to their audience to third parties. Retailers or media owners can sell-on white-labeled services through their online presence such as services or photo-sharing services. Companies can gain commission through selling products which are complementary. Decision 5 Electronic communications offer opportunities for new market structures to be created through disintermediation, reintermediation and countermediation. # 33 Decision 6: SCM capabilities Decision 6 The main e-business strategy decisions that need to be reviewed are: How should we integrate more closely with our suppliers? Which types of materials and interactions with suppliers should we support through e-procurement? Can we participate in online marketplaces to reduce costs? (SCM and e-procurement will be discussed later.) # 34 17

18 Decision 7: Internal knowledge management capabilities Decision 7: Questions that can be answered in this category are: How can our intranet be extended to support different business processes such as new product development, customer and SCM? How can we disseminate and promote sharing knowledge between employees to improve our competitiveness? Framework.Source: Dave Chaffrey, E-Business and nt, 4 th Edition, Marketing Insights Limited 2009 Knowledge Management E-Commerce Managemen # 35 Decision 8: Organizational resourcing and capabilities Gulati and Garino (2000) identify a continuum of approaches from integration to seperation. The choices are: In-house division: For example, the RS Components Internet Trading Channel ( Joint venture (mixed): The company creates an online presence in association with another player. Stategic partnership (mixed): This may also be achieved through purchase of existing dotcoms. Spin-off (seperation): For example, the bank Egg is a spin-off from the Prudential financial services company. The other aspects of organizational capability that should be reviewed and changed to improve their ability to deliver e-business strategies includes: Strategy process and performance improvement Structure Senior management buy-in Marketing integration Online marketing focus # 36 18

19 Failed e-business stategies Reasons: Timing reasons: f.e., services for download of digital entertainment that where offered before high-speed broadband Internet access was widely available. Insufficient i research hhad dbeen conducted dabout tdemand dfor online products in terms of access. Lack of creativity: many services copied existing business models, or other online retail services. Insufficient research had been conducted about competitor differentiators and capabilities and whether these would be sufficient to encourage consumers to switch providers. Offering free services: many services were offered free to gain site visitors and registration. If a good free facility was provided it then became difficult to encourage payment for marginally better services. This is difficult balance to get right. Over-ambition: To achieve investor funding amongst many competing companies, some entrepreneurs exaggerated the demand for their products and the growth. # 37 Information systems strategy and e- business strategy Business-alignment IS strategy: The IS strategy is generated from the business strategy through techniques such as CSF (critical success factor) analysis. Business-impacting IS strategy: IS strategy analyses opportunities for new technologies and processes to favourably impact the business. The impacting approach may also involve redesigning business processes to integrate with partners such as suppliers and distributors. Identified strategic objectives are: Cost reduction and value chain efficiencies Revenue generation Channel partnership Communcations and branding # 38 19

20 Elements of IS strategy IS strategy plan contains three elements. Business information strategy IS functionality strategy IS/IT strategy Conclusion: Developing an IS strategy to achieve e-business goals is complex because it can be viewed from many different ways! # 39 Short Summary 1. The e-business marketplace involves transactions between organizations and consumer (B2C) and other businesses (B2B). Consumer-to-consumer (C2C) and consumer-tobusiness categories (C2B) can also be identified. 2. The internet can cause disintermediation within the marketplace as an organization`s channel partners such as wholesaler or retailers are bypassed. Alternatively, the internet can cause reintermediation as new intermediaries with a different purpose are formed to help bring buyers and sellers together in a virtual marketplace. Evaluation of implications of these changes and implementation of alternative countermediation strategies is important to strategy. 3. Trading in the marketplace can be sell-side (seller-controlled), buy-side (buyer-controlled) or at a neutral marketplace. 4. The internet may also offer opportunities for new revenue models such as commission on affiliated referrals to other sites or banner advertising. 5. The success of dot-com or Internet start-up companies is critically dependent on their business and revenue models and traditional i management practice. 6. Continuous scanning of micro- and macro-environment of an organization are required, with particular emphasis on the changing needs of customers, actions and business models of competitors, and opportunities offered by new technologies. Techniques include resource analysis, demand analysis, competitor analysis, applications portfolio analysis, SWOT analysis and competitive environment analysis. # 40 20

21 Short Summary (2) 7. Strategy definition. Eight key decisions of e-business strategy that were reviewed are: Decision 1: E-channel priorities Decision 2: Market and product development Decision 3: Positioning and differentiation strategies Decision 4: Business and revenue models Decision 5: Marketplace restructuring Decision 6: SCM capabilities Decision 7: Internal knowledge management capabilities Decision 8: Organizational resourcing and capabilities 8. Information systems strategy should use a combination of impact and alignment techniques to govern e-business strategy. IS strategy can take a number of perspectives, of which those on information or knowledge management and technological and applications infrastructure are most important. # 41 Thank you for your attention! # 42 21