EC Strategy, Globalization, and SMEs Chapter 14 EC Strategy, Globalization, and SMEs

Learning Objectives 1. Describe the EC strategy phases. 2. Describe the need for justifying EC investments. 3. Evaluate the issues involved in global EC. 4. Describe the reasons for success and failure of EC. 5. Describe how small and medium-sized businesses can use EC. 6. Describe the major components of EC implementation. 7. Discuss the steps in developing an EC system. 8. Describe the major EC development strategies.

Organizational Strategy: Concepts and Overview The Impact of the Internet Strategic Planning for IT and EC

The Strategy and Performance Cycle and Tools *Strategy Initiation—Goals Improved performance Gain of competitive advantage Increased sales and revenue Improved customer and partner service and relationships Generation of new business models and facilitating innovation

The Strategy-Performance Cycle

The Strategy and Performance Cycle and Tools *Strategy Formulation Specific activities and outcomes from this phase include: Business opportunities Cost–benefit analysis Risk analysis, assessment, and management Business plan *Strategy Implementation The major specific activities and outcomes from this phase include: Project planning Resource allocation Project management

The Strategy and Performance Cycle and Tools *Strategy Assessment Performance Improvement and Innovations Major Tools for Strategic Planning

Figure 14.2 The performance assessment process Strategy, Tactics, Plans, Implementation Balanced Scorecard Performance Metrics KPIs Monitoring Performance Compare Performance to Metrics Analytics, Web Analytics Reports and Dashboards Figure 14.2 The performance assessment process

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? Increased Pressure for Financial Justification Companies are careful with EC expenses and budgets The demand for expanding or initiating e-business projects is high

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? Other Reasons Why EC Justification Is Needed EC projects must compete with other internal and external projects for funding and resources Companies are required to assess the success of EC projects after their completion The pressure by top management for better alignment of EC strategy with the business strategy The success of EC projects may be assessed in order to pay bonuses to those involved with the projects

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? EC Investment Categories and Benefits IT infrastructure provides the foundation for EC projects or applications in the enterprise EC applications are specific projects and programs for achieving certain objectives How Is An EC Investment Justified? Cost–benefit analysis* Cost–Benefit Analysis and the Business Case

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? What Needs to Be Justified? When Should Justification Take Place? The following are cases where formal evaluation may not be needed: When the value of the investment is relatively small for the organization When the relevant data are not available, are inaccurate, or are too volatile

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? Using Metrics in EC Justification Metrics, Measurements, and Key Performance Indicators (KPIs)*

Figure 12.1 How Metrics Are Used in Performance Management

Processes & Efficiency Financial & Fiduciary Processes & Efficiency Capacity & Knowledge Customers & Stakeholders Strategy KPIs/Targets Figure 14.4 The balanced scorecard approach

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? Web Analytics* The Process of Justifying EC and IT Projects Establish an appropriate basis for analysis with your vendor, and then conduct your ROI Investigate what metrics to use and be sure about their accuracy Justify the cost-benefit under appropriate assumptions Verify all data used in the calculation Include strategic benefits, including long-term ones Make data as realistic as possible, and include cost avoidance and risk analysis Commit all business partners, as well as suppliers and major customers to your plans Justifying Social Networking and the Use of Web 2.0 Tools

WHY JUSTIFY E-COMMERCE INVESTMENTS? HOW CAN THEY BE JUSTIFIED? Web Analytics* The Process of Justifying EC and IT Projects Establish an appropriate basis for analysis with your vendor, and then conduct your ROI Investigate what metrics to use and be sure about their accuracy Justify the cost-benefit under appropriate assumptions Verify all data used in the calculation Include strategic benefits, including long-term ones Make data as realistic as possible, and include cost avoidance and risk analysis Commit all business partners, as well as suppliers and major customers to your plans Justifying Social Networking and the Use of Web 2.0 Tools

A STRATEGY FOR GLOBAL E-COMMERCE Deciding whether to “go global” is a strategic issue Benefits and Extent of Global Operations A major advantage of EC is the ability to conduct business at any time, from anywhere, and at a reasonable cost Globalization and Social Networking

A STRATEGY FOR GLOBAL E-COMMERCE Barriers to Global E-Commerce Cultural Differences Language Translation Machine Translation Legal Issues Geographic Issues and Localization Web Localization Payments in Global EC Trades Economic and Financial Issues E-Commerce in Developing Countries

A STRATEGY FOR GLOBAL E-COMMERCE Breaking Down the Barriers to Global E-Commerce Be strategic Know your audience Localize Think globally, act consistently Value the human touch Clarify, document, explain Offer services that reduce trade barriers

E-COMMERCE STRATEGY FOR SMALL AND MEDIUM-SIZED ENTERPRISES E-commerce can be one of the most effective business strategies for small and medium-sized enterprises (SMEs) The potential for SMEs to expand their markets and compete with larger firms through EC is enormous Globalization and SMEs Resources to Support SME Activities in EC

THE IMPLEMENTATION LANDSCAPE The Major Implementation Factors Justification/Economics Acquire or Self Develop Your E-Commerce or Social Media Management System Organizational Readiness and Impacts of E-Commerce How to Succeed

Figure 14.5 The elements in EC and social media implementation

DEVELOPMENT STRATEGIES FOR E-COMMERCE AND SOCIAL MEDIA PROJECTS In-House Development: Insourcing Insourcing with Applications or Tools Advantages and Limitations of Software Solutions Outsourcing Development and Implementation Selecting a Development Option

Factors that Determine E-Commerce and Social Media Success OPPORTUNITIES FOR SUCCESS IN E-COMMERCE AND SOCIAL MEDIA AND AVOIDING FAILURE Factors that Determine E-Commerce and Social Media Success E-Commerce and Social Media Failures E-Commerce and Social Marketing Effectiveness E-Commerce and Social Media Successes Cultural Differences in EC and Social Media Successes and Failures

Managerial Issues What is the strategic value of EC to the organization? Why do we need an EC and social media planning process? How do you relate the EC or social media activities to business objectives and metrics? How can EC and social media go global? What can small businesses do to remain competitive? How can we plan for successful implementation?

Summary Strategy concepts and competitiveness. The need for EC and social media justification. Issues in global EC and social media. Reasons for EC and social media success and failure. Small and medium-sized businesses and EC and social media. The major components of EC and social media implementation. The major EC and social media development strategies, along with their advantages and disadvantages.