Tour VI eBusiness Strategy E Widodo e 2

Tour VI: e-Business Strategy E. Widodo e-

2 Objectives • Understand effective strategy for e-business • Know the differences between traditional business and e-Business strategy • Be able to integrate some alternative strategies e-

Contents 3 • • • e- e-Business strategy Strategic analysis Strategic objectives Strategy definition Strategy implementation

e-Business strategy 4 • Strategy: definition of the future direction and action of a company defined as approaches to achieve specific objectives. • e-Business strategy: definition of the approach by which application of internal and external electronic communication can support and influence corporate strategy. Corporate strategy Derivation e-Business strategy Buying side e- SCM strategy Selling side IS/IT strategy Intern Marketing/CRM strategy

5 Strategy process models • Strategy process model: a framework for approaching strategy development. • Common elements involve: – Internal and external environment scanning or analysis. – Clear statement of vision and objectives. – Strategy development can be broken down into strategy option generation, evaluation and selection. – Strategy implementation (enactment). – Control mechanism to monitor operational and strategy effectiveness. e-

6 e- E-Business strategy process models • Hackbarth & Kettinger (2000), a four stage “strategic ebreakout”: – Initiation – Diagnosis of industry environment – Breakout to establish a strategic target – Transition or plotting a migration path • Weakness: – Does not emphasize objective setting – No control mechanism • Strengths: – Detailing specific e-Business strategy development activities • Ex: diagnosis includes customer, suppliers, partners and technology

7 E-Business strategy process models • UK institute of directors (2000) emphasizes some differences on : – Planning horizon, based on forecast to develop short, medium and long term e-business strategy. – Planning cycles, iterative strategic development since the competitive advantage is very volatile. – Power base, information power-based to access, control and manipulate critical information. – Customer focus, base on the ultimate consumer of the value chain. e-

8 E-Business strategy process models • Chaston (2000), “selecting e-strategy and constructing eplan”: – Situation review – SWOT analysis – Summary of key issues – Statement of future objectives – Strategy to achieve future objectives – Marketing mix for delivering strategy – Action plan – Financial forecast – Control system – Contingency plan e-

9 e- E-Business strategy process models • Venkatraman (2000), “dot-com strategy”: – What is your strategic vision? This concludes business model and how to achieve it. – How do you govern dot-com operations? Operational decision (production, sourcing, logistics, marketing & HR) and trade-off with financial decisions (investment, funding sources & performance criteria) – How do you allocate key resources of the dot-com operations? Resourcing: internal resourcing, alliances or outsourcing. – What is your operating infrastructure for the dot-com operations? Infrastructure to add value to customer via functionality, personalization and ensuring privacy. – Is your management team aligned to the dot-com agenda? Responsibility and structure used.

10 e- Generic strategy process model

11 Emergent strategy • Emergent strategy: strategic analysis, strategic development and strategy implementation are interrelated and developed together with emphasize on continuous review and prioritizing of investment. e-

12 Strategic analysis • Strategic analysis/situation analysis: collection and review of information about an organization’s internal processes and resources & external marketplace factors in order to inform strategy definition. • Including: – Internal resources and process of the company – Immediate competitive environment (microenvironment) – Wider environment (macro-environment) e-

Internal resources and process 13 • Resource analysis: review of the technological, financial and HR of an organization and how they are utilized in business processes. • It can be represented by evaluation of stage models of e-Business development. e- 1. Web presence 2. e-Commerce 3. Integrated e -Commerce 4. e-Business Service available Brochureware of interaction with product catalogues Transactional function on buying & selling side Buying and selling side integrated with ERP or leg. syst. Full integration of intern processes & elements of value network Organizational scope Isolated departments Crossorganizational Across the enterprise (extraprice) Strategy Limited Selling side e. Commerce e-Commerce strategy with business strategy e-Business strategy as part of business strategy

14 e- Application portfolio analysis

15 e- Organizational & IS SWOT analysis

16 Immediate competitive environment • Dominant factor is Demand Analysis. • Demand analysis: assessment of the demand for e. Commerce service amongst existing and potential customer segments. e-

17 e- Wider environment

18 e- Strategic objectives • Strategic objectives: statement and communication of and organization’s vision, mission and objectives. • Objectives is accompanied with strategies and performance measures. – O 1: Develop revenue from new geographical market – S 1: Create e-Commerce facility for standard products and assign agents to this market – PM 1: Achieve combined revenue of Rp 1 T by year end. Online revenue contribution is of 45% – O 2: Improve efficiency of sourcing raw materials – S 2: Create e-Procurement system – PM 2: Reduce cost of procurement by 5% for the 1 st year and 10% for the 2 nd one • Balance Score Card is commonly used to translate organizational strategy into objectives and then providing metrics to monitor the execution.

19 e- Strategy definition • Strategy definition: formulation, review and selection of strategies to achieve strategic objectives. • Including: – Options generation – Options evaluation – Options selection • Six key e-business strategic decisions: – e-Business priorities – Business and revenue models – Marketplace restructuring – Market & product development – Positioning & differentiation – Organizational restructuring

20 e- Strategic options of e-Business

21 e- Market and product development strategies

22 Strategy implementation • Strategy implementation: planning, actions and controls needed to achieve strategic objectives. • Including: – Planning – Execution – Control • Implementation issues: – SCM strategy (buying-side) – e-Marketing strategy (selling-side) – Planning, scheduling and change management – E-Business analysis and design – Implementation, maintenance & control e-

6 th week souvenir 23 Task 1: Please relax yourself for a while and then enjoy our mid-term-test week. OK? e-