COMP 7880 EBusiness Strategies Introduction Dickson K W

COMP 7880: E-Business Strategies Introduction Dickson K. W. Chiu Ph. D, SMIEEE, SMACM, Life MHKCS Jelassi & Enders: Chapter 1 -2 1

Tentative Topics 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Introduction and overview External and internal analysis Strategy options in e-business markets Sustaining competitive advantage Exploiting new market spaces Strategy for internal organization Strategy for interaction with suppliers Strategy for interacting with customers Creating effective web presence Mobile Commerce Web 2. 0 Environment and Social Networks COMP 7880 -Intro-2

Scope of Electronic business e-business Electronic commerce Mobile e-commerce Source: Adapted from D. Chaffey, 2002, p. 9. COMP 7880 -Intro-3

The focus of the cases is on corporate level and business unit strategy Corporatelevel strategy Business unit strategy Operational strategy Corporation Business unit A R&D Business unit B Production Business unit C Etc. COMP 7880 -Intro-4

Different stages of technological revolutions as their diffusion increases Degree of diffusion of the technological revolution INSTALLATION PERIOD DEPLOYMENT PERIOD Previous great surge 5 Maturity 4 Synergy (‘golden age') 2 3 Crash Frenzy (‘gilded age') 1 Irruption Big bang Next great surge Next big bang Time Source: Adapted from C. Perez, 2002, p. 48. COMP 7880 -Intro-5

Major technological revolutions in history INSTALLATION PERIOD 1 2 'Irruption' 'Frenzy' 'Crash' 1770 s and early 1780 s late 1780 s and early 1790 s crash in 1797 1798– 1812 1813– 1829 1830 s 1840 s crash in 1847 1850– 1857– 1873 1875– 1884– 1893 crash in 1893 1895– 1907 1908– 1918 1908– 1920– 1929 crash in 1929 1943– 1959 1960– 1974 Technological revolution (core country) 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) DEPLOYMENT PERIOD Source: Adapted from C. Perez, 2002, p. 57. 3 4 5 'Synergy' 'Maturity' Timeline COMP 7880 -Intro-6

e-business and NASDAQ in the past decade 1 2 4 3 'Grassroots of e-business' 'Stock market crash' 'Rise of the Internet' NASDAQ Points 'Synergy' – 45% 1994 1995 1996 1997 Launch of Amazon. com Source: NASDAQ quotes taken from Factiva. com. 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year COMP 7880 -Intro-7

Definitions of strategy n n 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 business’s 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.

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.

Goal of e-business strategy Formulation Environment Goals Market positioning Competitive advantage (Long-term) success Resource exploitation Resources Implementation Source: Adapted from H. Hungenberg (2006), p. 83 COMP 7880 -Intro-10

3 main steps of e-business strategy Mobile e-commerce strategy E-business strategy Strategy implementatio Strategy formulation n 12 Strategic analysis 3 External analysis 9 5 Internal organisation Strategy options Opportunities/ threats Strengths/ weaknesses 4 Internal analysis 6 Sustaining competitive advantage 8 7 Exploring new market spaces Creating and capturing value 10 13 Interaction with suppliers Implementation 11 Interaction with users/customers COMP 7880 -Intro-11

E-business strategy formulation Key environmental/ industry developments Opportunities Strengths Firm characteristics Weaknesses Threats • Do we have the strengths to seize possible opportunities? • Do we have the strengths to fend off possible threats? • Which opportunities do we miss because of our deficits? • To which threats do our weaknesses expose us to? COMP 7880 -Intro-12

Net Commerce and Strategy 4 phases of Net commerce evolution *not a single step! atio n m r o f s n Tra e- COMP 7880 -Intro-13

Commerce. Net’s Views n n n 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) n n 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 COMP 7880 -Intro-14

Reverse Engineering an implementation – Vending Machine On-line n n 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… COMP 7880 -Intro-15

e-Business – What are transformed? n Form of information and documents n n E. g. , invoice, customer information, contract, product catalog, company news, payment records, … Processes for managing, analyzing and using them n n Functional perspective: accounting, sales and marketing, production, design, human resource, … Organizational perspective: Operational, Knowledge, Management and Strategy COMP 7880 -Intro-16

Vending Machine Example n n e-Commerce: Payment e-Business: n n n Machine -> Coca. Cola warehouse for refill CRM for where to put the machine and what to be sold Mobile payment solutions … Transforming a vending machine COMP 7880 -Intro-17

Evolving Aspects in e-Transformation n Business Models n n e-Application Categories n n How to accomplish… ? e-Application Functionalities n n What is to be accomplished? What is offered that helps to accomplish… ? To support the vision and strategy of the company n A Web-based system has no value by itself if it is not developed with a strategic plan => Strategic Information System COMP 7880 -Intro-18

Focus of this course n n NOT how to implement EC / EB functions BUT to n n n 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 COMP 7880 -Intro-19

Reference COMP 7880 -Intro-20

Brochureware n Business Model (B 2 C) n Use the net as: n n n Customer interaction n n key medium for global marketing a low-cost repository of product and service information static documents and simple multimedia reading text view pictures Transactions are performed over traditional means Now, we still go the shops to buy most of our need… COMP 7880 -Intro-21

e-Commerce n n Focus on consumer transactions and interactions over the Internet Business Model n n Characterized by n n buying and selling to consumers online (B 2 C) the. com mania - lots of new companies operating online content-aggregation business model - focus on consumer founder and situation driven Some success factors n n Branding Marketing Personalization of service Creation of customer community COMP 7880 -Intro-22

e-Commerce Functionalities & Examples n e-Tailing and Consumer Portal (CDNOW): n n Bidding and Auctioning (e. Bay): n n online catalogs, bid boards, account management, and notification Consumer Care and Management (e-Trade): n n online catalogs, personalization, advertising, shopping carts, and online communities personalization, self-service, immediacy, and information Electronic Bill Payment (AT&T): n bill consolidation, analysis and reporting, payment processing, and integration COMP 7880 -Intro-23

e-Business n Business Model n n n Characterized by n n Focus on B 2 B applications over the Internet evolve from well-established brick-and-mortar companies seeking process improvement focus on an organization’s core competencies process aggregation oriented business model process-driven; also technology-driven Some success factors n n n create and integrate the right processes agile applications ability to integrate applications and data right organizational structure Means of overcoming political obstacles COMP 7880 -Intro-24

e-Business Functionalities & Examples n Virtual Marketplace (Dell) n n Procurement & Resource Management (Master. Card) n n Request for info, request for proposal, requisitioning, purchase orders, payment, and supplier management Extended Value Chain (Fed. Ex) n n Catalog, buying tools, integration, and payment option, . . Demand supply planning, logistics, and production planning Customer Relationship Management (HP) n Self-service, solution-center, personalization, and account management functionalities COMP 7880 -Intro-25

SCM vs ERP vs CRM Supplier Supply Chain Mgmt Manufacturer Enterpris e Resource s Planning Customer Relationship Mgmt COMP 7880 -Intro-26

e-Enterprise (1) n n Convergence of B 2 C and B 2 B functionalities for those who serve both market segments New value chain “Click and Mortar” n n combining traditional bricks-and-mortar assets with the efficiency of cybermediation Co-opetitive virtual organizations Supply side: Procurement of raw material cybermediation Demand side: consumer retailing and customer management COMP 7880 -Intro-27

e-Enterprise (2) n Complex combinations of internal and external business processes and relationships with … Suppliers Customers Distributors Company A Partners Competitors COMP 7880 -Intro-28

e-Enterprise (3) n Business Model (B 2 C + B 2 B) n n Applications n n n Based on people (role) aggregation 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 ) COMP 7880 -Intro-29

e-Enterprise (4) n Value Proposition n n more than manufacturing techniques or prime location outlets Speed and Agility n n n Gained by leveraging existing asset base through the Net Example 1, Tim. Kin Corp. (bearings producer) n Self-service answers to customer about product availability and price (CRM) through linkage to the back-end inventory database -> 15 percent service reps moved to sales Example 2, Auto. Nation (automobile dealership network) n Use an on-line infrastructure to channel leads to its physical infrastructure of nationwise dealership. COMP 7880 -Intro-30