COMP7880: E-Business Strategies Sustaining competitive advantage Dickson K.W. Chiu PhD, SMIEEE, SMACM, Life MHKCS Jelassi & Enders: Chapter 6

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

Dynamic e-business strategy model Consistency ≠ Static Source: Adapted from description in Kalakota and Robinson (2000)

Barriers against imitation Imitator Incumbent Requirements for successful imitation Barriers against successful imitation 1 Must be able to identify competitive superiority Withhold information about profitability Forgo short-term profits for long-term success 2 Must be willing to imitate Deterrence: signal promise of retaliation Make commitments to make threat credible Pre-emption: exploit all available investment opportunities/secure access to resources 3 Must be able to understand sources of competitive advantage Tacit knowledge: rely on skills, processes or culture/resources that are implicit Causal ambiguity: rely on a complex, multidimensional mix of sources 4 Must be able to build/acquire necessary resources Base differentiation on resources that are rare/immobile/contracted Exploit-time lags Source: Adapted from H. Hungenberg (2006), p. 251.

Disruptive innovations meeting demands of mainstream customers Most demanding customers Sustaining innovations Performance Performance demanded by mainstream customers Disruptive innovations Least demanding customers Sustaining innovation: zielt auf anspruchsvolle, high-end Kunden ab bringt bessere Leistung, als bisher vorhanden war sowohl inkrementell als auch break-through Platzhirsche gewinnen, weil besseres Produkt kann für höhere Profitmargen verkauft werden sie Resourcen haben Disruptive Innovationen: bieten Produkte, die nicht so gut sind wie bisherige Produkte Vorteile Einfacher bequemer in der Nutzung günstiger Time Source: Adapted from C. Christensen and M. Raynor (2004), p. 33.

Framing during implementation Overcoming organizational rigidities Rigid plan, high commitment Flexible plan, high commitment Threat resource commitment Framing during Rigid plan, low commitment Flexible plan, low commitment Opportunity Threat Opportunity Framing during implementation Source: Adapted from C. Gilbert (2006), p. 152

Determine threat of a disruptive innovation Is there a large group of people who previously did not have the money or the skills to purchase the product themselves? Did customers have to go to a central, inconvenient location to purchase the product? Non-served customers Are there customers at the bottom end of the market who would buy the same product with fewer features for a lower price? Is it possible to build a profitable business model while keeping down prices? Over-served customers Is the innovation disruptive relative to all relevant rival companies that are currently competing in that market? Disruptiveness to competitors COMP7880-SCA-7

E-business strategy changes based on SWOT Analysis

Dealing with disruptive innovations Not responding at all Not responding is quite often based on ignoring or not properly assessing the underlying facts. Migrating/ harvesting The migration strategy is based on a conscious decision to ‘milk existing resources’. When defending their existing markets, incumbents need to improve their business model so that they are either able to lower their prices or increase the benefits they provide to their customers Defending This strategy attempts to combine the best of both worlds. While this option might seem to be the most promising at first sight, it also entails major risks. Straddling This option entails a complete switch to the new business model. Yet, it is also the riskiest of all options, since there is always a high degree of uncertainty associated. Switching Through this approach, a company tries to out-substitute the substitution. From a long-term strategic perspective, this option is highly attractive, yet it requires a very deep understanding of how technology and market demand will evolve. Leapfrogging Source: See P. Ghemawat (2005), p. 106. COMP7880-SCA-9

Alternative positioning for services / products / price