Tour VI: e-Business Strategy E. Widodo

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

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

e-Business strategy 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 e-Business IS/IT Marketing/CRM SCM Buying side Selling side Derivation Intern

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-Business strategy process models Hackbarth & Kettinger (2000), a four stage “strategic e-breakout”: 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

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-Business strategy process models Chaston (2000), “selecting e-strategy and constructing e-plan”: 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-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.

Generic strategy process model

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.

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 (micro-environment) Wider environment (macro-environment)

Internal resources and process 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. 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 Cross-organizational Across the enterprise (extraprice) Strategy Limited Selling side e-Commerce e-Commerce strategy with business strategy e-Business strategy as part of business strategy

Application portfolio analysis

Organizational & IS SWOT analysis

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

Wider environment

Strategic objectives Strategic objectives: statement and communication of and organization’s vision, mission and objectives. Objectives is accompanied with strategies and performance measures. O1: Develop revenue from new geographical market S1: Create e-Commerce facility for standard products and assign agents to this market PM1: Achieve combined revenue of Rp 1T by year end. Online revenue contribution is of 45% O2: Improve efficiency of sourcing raw materials S2: Create e-Procurement system PM2: Reduce cost of procurement by 5% for the 1st year and 10% for the 2nd one Balance Score Card is commonly used to translate organizational strategy into objectives and then providing metrics to monitor the execution.

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

Strategic options of e-Business

Market and product development strategies

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

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