1. MIS 205: E-Business Lecture 4: E-Business Strategy (Book Chapter 5)
Md Mahbubul Alam, PhD
Associate Professor

2. Intended Learning outcomes
Understand how e-business strategy differs from traditional business strategy.
Identify an appropriate e-business strategy and integrate it with existing business and information systems strategy.
Outline alternative strategic approaches to achieve e-business.
Evaluate investment priorities and returns from e-business.
Prepared and Presented by Md. Mahbubul Alam, PhD

3. Prepared and Presented by Md. Mahbubul Alam, PhD
E-business Strategy
What is strategy?
A plan of action designed to achieve a particular goal.
‘Defines how we will meet our objectives’.
‘Sets allocation of resources to meet goals’.
‘Selects preferred strategic option to compete within a market’.
‘Provides a long-term plan for the development of the organization’.
‘Identify competitive advantages through developing an appropriate positioning defining a value proposition delivered to customer segments’.
What is E-business strategy?
Approaches by which applications of internal and external electronic communications can support and influence corporate strategy.
A fusion of existing approaches to business, marketing, supply chain management and information systems strategy development.
NOT only define ‘how to do business online’ BUT defines ‘how to do business differently online’.
Prepared and Presented by Md. Mahbubul Alam, PhD

4. Forms of Organizational Strategy
Corporate strategy
Concerned with the overall purpose and scope of the organization.
Business unit strategy
Defines how to compete successfully in a particular market.
Operational strategy
Concerned with achieving corporate and business unit strategies.
Functional strategy
Describe how the corporate and business unit strategies will be operationalized in different functional areas or business processes.
Refers to marketing, SCM, HR, Finance, IS strategies.
Corporate strategy
Business unit strategy
Operational strategy
Functional strategy
1. Functional strategy: part of marketing or logistics or IS strategies Vs. Element of corporate strategy development.
Where should e-business strategy be incorporated with?
Functional strategy Vs. Corporate strategy
Prepared and Presented by Md. Mahbubul Alam, PhD

5. Relationship between e-business strategy and other strategies
Buy-side e-commerce strategy
Maximize operational efficiencies through
Automate internal processes
Link internal resource management systems with external purchasing systems
Prioritize suppliers / partners collaborating using this channel
Prioritize applications for E-SCM
Involves selection of appropriate strategic partners
Sell-side e-commerce strategy
Channel strategy which defines how firms should
Hit channel leads and sales targets
Communicate benefits of using this channel
Prioritize products available through channel
Prioritize audiences targeted through channel
Prepared and Presented by Md. Mahbubul Alam, PhD

6. Prepared and Presented by Md. Mahbubul Alam, PhD
E-channel strategies
E-channel strategy
Describe how a company should set specific objectives and develop specific differential strategies for communicating with its customers and partners through electronic media such as the Internet, , wireless media.
Without specific goals and strategies, adoption of the new channel will be slow.
Multi-channel e-business strategy:
Defines how different marketing and supply chain channels should integrate and support each other to drive business efficiency and effectiveness.
It also defines how an organization gains value internally from using electronic networks, such as sharing employee knowledge and improving process efficiencies through intranets.
“Right-channelling” Selective adoption of e-channels by business according to product or stakeholder preferences.
Reaching the right customers
Using the right channel
With the right message or offering
All the right time.
1. Right-channeling: e.g., British Airways.
Prepared and Presented by Md. Mahbubul Alam, PhD

7. What happens where there is no e-business strategy?
Missed opportunities for additional sales on the sell-side and for more efficient purchasing on the buy-side.
Fall-behind competitors in delivering online services – may become difficult to catch-up, for example, Tesco, Dell.
Inappropriate direction of e-business strategy, e.g., wrong emphasis on buy-side, sell-side or internal process.
Limited integration of e-business, e.g., separate organizational team with distinct responsibilities.
Poor customer experience from poorly integrated channels.
Resource wastage through duplication of e-business development, e.g., developing separate websites for suppliers.
Prepared and Presented by Md. Mahbubul Alam, PhD

8. Strategy Process Model for e-Business
A framework that gives a logical sequence to follow to ensure inclusion of all key activities of e-business strategy development. It includes
Internal and external environmental scanning or analysis is needed.
A clear statement of vision and objectives is required.
Strategy development can be broken down into strategy option generation, evaluation and selection. It consists reviewing a range of alternatives and selecting the best on its merits.
Implement the strategy, and monitor operational and strategy effectiveness problems and adjust the operations or strategy accordingly.
Prepared and Presented by Md. Mahbubul Alam, PhD

9. Strategy Process Model for e-Business (Cont’d)
Three key elements (Jelassi & Enders, 2008)
Strategy analysis : Where will the organization compete?
Strategy development: Strategy option to generate value through
Cost leadership-> company competes in terms of low prices
Differentiation leadership-> company competes in terms of superior products and services
Strategy implementation: How should the organization be designed to deliver value?
Internal structure and resource and interfaces with external companies.
Prescriptive Strategy Vs. Emergent Strategy
All elements are linked together sequentially-> Prescriptive strategy, e.g., short-time budgeting
All elements are interrelated and are developed together, e.g., respond to marketplace dynamics.
Prepared and Presented by Md. Mahbubul Alam, PhD

10. Dynamic e-Business Strategy Model (Kalakota & Robinson, 2000)
Approaches
Strategic analysis
Monitor introduction of new approaches by competitors.
Third-party benchmarking service reporting monthly or quarterly on new functionality introduced by competitors.
Ad hoc customer panel used to suggest or review new ideas.
Quarterly longitudinal testing of usability.
Subscription to audience panel data.
Strategy formulation and selection
Budget flexible to reassign priorities.
Digital channel strategy group meets monthly, empowered to take decision.
Strategy implementation
Use of agile development methodologies to enable rapid development.
Area of site used to showcase new tools currently under trial
Prepared and Presented by Md. Mahbubul Alam, PhD

11. Strategic Analysis and Elements of Strategic Situation Analysis
Collection and review of information about the external environment and internal resource.
Immediate competition, i.e., micro- environment, e.g., customer demand and behavior.
Wider environment, i.e., macro- environment in which a company operates, e.g., economic development and regulation by governments, social, legal, economic and political factors.
Internal resources and processes of the company, to assess its e-business capabilities.
Prepared and Presented by Md. Mahbubul Alam, PhD

12. Stage Models of e-Business Development
Prepared and Presented by Md. Mahbubul Alam, PhD

13. Stage Models of e-Business Development (cont’d)
Level
Feature(s)
Level 0
No web site or presence on web
Level 1
Basic web presence (awareness creation)
Level 2
Simple static information web site (basic company and product information)
Level 3
Simple interactive site (Users can search and make queries to retrieve information such as product availability and pricing.
Level 4
Interactive site supporting transactions with users (online buying and interactive customer feedback)
Level 5
Fully interactive site supporting the whole buying process
Prepared and Presented by Md. Mahbubul Alam, PhD

14. Technique 1: Resource and Process Analysis
Concerns with e-business capabilities
Review of the technological, financial and human resources of an organization and how they are utilized in business processes.
Resources: tangible and intangible assets
Tangible: IT infrastructure, bricks and mortar and financial capital
Intangible: company’s brand and credibility, employee knowledge, licenses and patents.
Capabilities: the ability of a firm to use resources effectively to support value creation. In other words, the process of plan, review, enhance e-channel performance through web analytics.
Prepared and Presented by Md. Mahbubul Alam, PhD

15. Technique 2: Application Portfolio Analysis
Purpose:
To assess current information systems capability
To inform future strategy
Benchmarking of e-commerce capabilities and identifying strategic priorities (E-consultancy, 2008)
Digital channel strategy: e.g., situation analysis, goal setting, identification of key target markets & audience.
Online customer acquisition: e.g., gaining new customers through online digital media channels.
Online customer conversion and experience: e.g., improve online service levels and increase conversion.
Customer development and growth: e.g., encourage visitors & customers to continue using online services.
Cross-channel integration and brand development: e.g., combination of traditional and online channel.
Digital channel governance: e.g., technology infrastructure such as hardware and networking facilities.
HR resources, financial management, production-line management systems will continue to support the operation however will not be a future priority.
Rather, dynamic customer catalogue online, online sales and collecting marketing intelligence about customer buying behavior will become more important.
Prepared and Presented by Md. Mahbubul Alam, PhD

16. Technique 2: Application Portfolio Analysis (cont’d)
Prepared and Presented by Md. Mahbubul Alam, PhD

17. Prepared and Presented by Md. Mahbubul Alam, PhD
SWOT analysis
An analysis that helps organizations to analyze their internal resources in terms of strengths and weakness and match them against the external environment in terms of opportunities and threats.
Not only used to analyze the current situation but also as a tool to formulate strategies.
Prepared and Presented by Md. Mahbubul Alam, PhD

18. Competitive Environment Analysis
Porter’s competitive forces model
Competitive rivalry
Strength of competition in the industry
Threat of new entrants
Ease with new competitors can enter the market
Bargaining power of supplier
Drive up the prices of your inputs
Bargaining power of customers
Drive down your prices/switching to competitor
Threat of substitutes
Availability of different products/services
How does the Internet impact the five competitive forces?
Plz. see Table 5.5, p.277
Prepared and Presented by Md. Mahbubul Alam, PhD

19. Competitive Forces in e-business
Prepared and Presented by Md. Mahbubul Alam, PhD

20. Prepared and Presented by Md. Mahbubul Alam, PhD
Strategic Objectives
Strategic objectives
Statement and communication of an organization's mission, vision and objectives.
Vision or mission
A concise summary defining the scope and broad aims of an organization’s digital channel in the future, explaining how they will contribute to the organization and support customers and interactions with partners.
Prepared and Presented by Md. Mahbubul Alam, PhD

21. Strategic Objectives (cont’d)
SMART objectives: Specific, measurable, actionable, relevant, time-related.
Online or Internet Revenue contribution (ORC): An assessment of the direct or indirect contribution of the Internet to sales, usually expressed as a percentage of overall sales revenue.
Conversion Marketing: Using marketing communications to maximize conversion of potential customers to actual customers.
Awareness efficiency: target web-users/all web-users
Locatability or attractability efficiency: number of individual visits/number of seekers
Contact efficiency: number of active visitors/number of visits
Conversion efficiency: number of purchases/number of active visits
Retention efficiency: number of repurchases/number of purchases
Balanced scorecard: next page
Prepared and Presented by Md. Mahbubul Alam, PhD

22. Prepared and Presented by Md. Mahbubul Alam, PhD
Balanced Scorecard
A framework for setting and monitoring business performance.
Tool for translating organizational strategies into objectives.
Prepared and Presented by Md. Mahbubul Alam, PhD

23. How can e-business create value?
Adding values: better quality products and services
Sense and respond communications-> Use technology to monitor consumers’ preferences indicated by their responses to websites or communications in order to target them with relevant, personalized and targeted communications.
Reducing cost: making the business process more efficient
Managing risks: improve information flow and availability
Creating new reality: create new way in which products or services can be developed
Prepared and Presented by Md. Mahbubul Alam, PhD

24. Creating value for e-business
Ref. Marchand et al. 2002
Prepared and Presented by Md. Mahbubul Alam, PhD

25. Prepared and Presented by Md. Mahbubul Alam, PhD
Strategy Definition
Formulation, review and selection of strategies to achieve strategic objectives.
Alignment with core capabilities
Alignment with other company initiatives
Fit with organizational structure
Fit with company’s culture and value
Ease of technical implementation.
Prepared and Presented by Md. Mahbubul Alam, PhD

26. Matrix for evaluating e-business strategy alternatives
Business value generated: incremental financial benefit, e.g., conversion rates, repeat customers
Customer value generated: would customer recommend the site?
Alignment with business strategy: does support current business goals?
Alignment with digital strategy
Alignment with brand values
Ref: Econsultancy (2008)
Prepared and Presented by Md. Mahbubul Alam, PhD

27. E-business Channel Priorities
‘Getting the right mix of bricks and clicks’
Internet pureplay: A company trading online that has limited or no physical presence such as retail units.
Switch-fully is impractical for many businesses.
Right-Channeling: Integrate different channels to reach the right person at the right time using the right channel with a relevant offer, product or message.
Prepared and Presented by Md. Mahbubul Alam, PhD

28. Market and Product Development Strategy
A key strategic considering is which market to target and using what products.
Prepared and Presented by Md. Mahbubul Alam, PhD

29. Positioning and Differentiation Strategy
Product performance excellence
Price performance excellence
Transactional excellence
Relationship excellence
Prepared and Presented by Md. Mahbubul Alam, PhD

30. Prepared and Presented by Md. Mahbubul Alam, PhD
Other Decisions
Business and revenue model: how a company will generate revenue?
Marketplace restructuring: opportunities for new market structures to be created through disintermediation, reintermediation and Countermediation within a marketplace.
SCM capabilities: how should firm integrate more closely with suppliers? e.g., Extranet
Internal Knowledge management capabilities: how should firm support internal business process? e.g., Intranet
Organizational resourcing and capabilities
In-house division (integration)
Joint venture (mixed)
Strategic partnership (mixed)
Spin-off (separation)
Prepared and Presented by Md. Mahbubul Alam, PhD

31. Strategy Implementation
Prepared and Presented by Md. Mahbubul Alam, PhD

32. Failed e-Business Strategies
Timing errors
Lack of creativity: copied existing business model
Free services
Over ambition
Other classic mistakes
Situation Analysis: insufficient research on demand and completive forces
Object setting: no or unrealistic objectives
Strategy definition: poor business and revenue models
Implementation: problems with customer services and product quality, infrastructure and change management, etc.
Prepared and Presented by Md. Mahbubul Alam, PhD

33. Strategy Implementation Success Factors for SMEs
Content—effective presentation
Convenience—usability
Control—manageable and under control
Interaction
Community
Price sensitivity
Brand image
Commitment
Partnership
Process Improvement
Integration
Prepared and Presented by Md. Mahbubul Alam, PhD

34. Question Please ? Acknowledgement:
“E-Business and E-Commerce Management: Strategy, Implementation and Practice” by Dave Chaffey