1. MD253/MK252 Electronic Commerce March 22, 2006 Strategy & the Internet

2. Topics Covered E-Commerce & The Five Forces of Industry Competitiveness Operational Effectiveness & Strategic Positioning Resources for Competitive Advantage –Characteristics –Examples of key resources –The Value Chain Strategy & the Internet – a critical look

3. ICA: Industry & Competitive Analysis (Porter’s Five Forces) Industry Competitors Potential New Entrants Substitute products or services Power of Suppliers Power of Buyers

4. Critical Concepts in Understanding Competitive Advantage Operational Effectiveness – performing the same tasks better than your rivals. Strategic Positioning – performing different tasks than your rivals, or performing the same tasks in a different way.

5. How Do We Know if Assets Yield Sustainable Advantage? Rareness –Is the asset in limited supply or difficult to acquire? Value –Does the asset yield value to the firm/customers? Imperfectly Imitable –Is the asset impossible to imitate? Non-Substitutable –Is the asset without comparable substitutes?

7. 87% Decline in International DS-3 Pricing in two years Source: BandXChange

8. Key Resources for Competitive Advantage –Imitation-resistant Value Chain Organization –Brand –Scale Economies –Alliances (with complementary firms & competitors) –Network Effects –Data and Switching Costs –Distribution Channels –Differentiation – product or service –Patents?

9. Value Chain InboundOperationsOutboundMarketingService logisticslogistics& Sales Infrastructure: general mgmt, planning, finance, IS HRM: recruiting, hiring, training, and development Tech. Development: R&D Procurement