e-business strategy strategic analysis - utrecht · pdf filestrategic analysis 2. strategic...
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E-business strategy
1. Strategic analysis 2. Strategic objectives 3. Strategy definition 4. Strategy implementation
Strategic analysis
• SLEPT'(Macro.environment)'• Resource'analysis'• Por;olio'analysis'• SWOT'• Demand/CompeCtor'(Porter’s'5'forces'model)'
Techniques'
• Stage'models'• Specific'e.business'opportuniCes'and'threats'
E.business'specific'techniques'
Strategic objectives
• Complement or Replace
Vision
• SMART • Online revenue contribution • Customer value target
Objectives
• Vision about capability to change or to reinvent • Online revenue contribution
E-business specific techniques
E-business strategy
1. Strategic evaluation/analysis 2. Strategic objectives 3. Strategy definition 4. Strategy implementation
Strategy definition
• OpCon'generaCon'• OpCon'evaluaCon'• OpCon'selecCon'
OpCons'
• 1.'Channel'prioriCes'• 2.'Market'and'product'development'• 3.'PosiConing'and'differenCaCon'strategies'• 4.'Business'and'revenue'models'• 5.'Marketplace'restructuring'• 6.'Supply.chain'management'capabiliCes'• 7.'Internal'knowledge'management'capabiliCes'• 8.'OrganizaConal'resourcing'and'capabiliCes'
E.business'strategic'decision'
Strategy definition
• Strategy definition is • formulation, • review and • selection of strategies to • achieve strategic objectives
• Preceded by • Generating options • Evaluation of options • Selection of options
Matrix Model for options (Tjan, 2001)
Viability 0"Points" 100"points"
Market'value'potenCal' <'10'M€' >'1000'M€'
Time'to'posiCve'cash'flow' >'5'years' <'1'year'
Personnel'requirement' >'20'people' <'5'people'
Funding'requirement' >'35'M€' <'3'M€'
Fit" Low" Medium" High"
Alignment'with'core'capabiliCes'
Alignment'with'other'company'iniCaCves'
Fit'with'organizaConal’s'structure'
Fit'with'organizaConal’s'culture/values'
Ease'of'technical'implementaCon'
Strategy alternatives matrix
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Decision 1: Channel priorities
“Getting the right mix of bricks and clicks” Gulati and Garino (2000)
Channel priorities
• Internet pureplay: Company trading online with limited or no physical presence, e.g. as retail units • Particularly start-ups • Impractical for many businesses
• Right channeling: • The right person
• At the right time • Using the right communication channel
• With a relevant offer, product or message.
Channel priorities
• Right-channeling applications: Example Application and tactics Account-managed relationships Face-to-face and phone with large,
high-sales-volume clients Sell to and serve SME online Internet sales and extranet service Encourage customer to online channels
???
Provide offline conversion during sales
Phone callback or live chat from within web sales
Migrate customers to web self-service
Self-manage accounts for lower-cost-to-serve
Selective service levels for different customer types
Integrated CRM systems
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Development strategies
• Question: • What is sold? • Who is it sold to?
• Market and Product development matrix:
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Positioning and differentiation
Porter (1985, 2001): Profitability is determined by: 1. Industry structure 2. Sustainable competitive advantage Cost and price advantage achieved through: 1. Operational effectiveness 2. Strategic positioning
Positioning and differentiation
Operational effectiveness (OE) = • Performing similar activities better than rivals
perform them. • Internet is (most) powerful tool for enhancing OE Productivity frontier = • Maximum value a company can deliver at a given
cost, given best available technology, skills, management techniques…
Competition leads to: • Absolute improvement in OE (for all) • Relative improvement in OE to no one
Positioning and differentiation
“Competitive strategy is about being different”
Strategic positioning = Attempts to achieve sustainable competitive advantage by preserving distinction:
• Perform different activities from competitors, or • Perform similar activities in different ways.
Positioning and differentiation (2)
Porter’s Generic strategies (based on 3 dimensions)
• Level of differentiation • Relative product cost • Scope of target market
• Three most viable bases for positioning: • Cost leadership • Differentiation • Focus
Origins of strategic positioning
Porter (1996): 1. Variety-based positioning:
based on choice of product or service 2. Needs-based positioning:
based on choice of customer/market segment 3. Access-based positioning:
based on segmenting customers who are accessible in different ways
Scope: • Any positioning can be broad or narrow
Examples
• Low-cost airline carrier (Ryanair, Easyjet) • Variety-based, narrow focus
• Regular airline • Variety-based, broad focus
• IKEA • Needs-based, broad focus
• Apple • Variety-based, broad focus
• Bang & Olufsen • Variety-based, narrow focus
Trade-off and Fit
Trade-off: • When you choose a particular position, you choose
not to use other approaches • These trade-offs are essential and make imitation
difficult Fit: • Production, marketing, personnel, etc. should all be
consistent: • When all activities work together as a system,
imitation is difficult.
Alternatives: value disciplines
Treacy & Wiersema: 1. Operational excellence:
Best total cost 2. Product leadership:
Best product 3. Customer intimacy:
Best total service In practice: 1. Each dimension should be good 2. Choose excellence in one dimension
Customer value
• Position relative to competitors: • Product quality • Service quality • Price • Fulfillment time
• Deise et al. (2000)
Customer value (brand perception) = Product quality ×Service qualityPrice ×Fulfilment time
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Business and revenue models
• Recall: Business model: A summary of how a company will generate revenue, identifying its product offering, value-added services, revenue sources and target customer
• Revenue model: Describe methods of generating income
• Observations from practice: • Change and flexibility ≠ Losing focus on core
business • Innovation often through acquisition
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Marketplace restructuring
• Review options for: • Disintermediation • Re-intermediation • Countermediation
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Supply-chain management capabilities
• Questions: • Integrate more closely with suppliers? • Which materials and interactions should we
support through e-procurement? • Can we participate in online marketplaces to
reduce costs?
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Knowledge
Every day knowledge essential to your business walks out of your door, and much of it never comes back.
Saunders (2000)
Knowledge: • Combination of data and information, • With added expert opinion, skills and experience
• Explicit / Tacit • Individual and/or collective
Knowledge management
Knowledge management: • Techniques and tools for disseminating knowledge
• Main activities: • Identify • Create • Store • Share • Use
Technologies for KM
Classes of KM applications (Binney, 2000): 1. Transactional:
Helpdesk, customer service apps 2. Analytical:
Data mining/warehousing for CRM apps 3. Asset management:
Document and content management 4. Process support:
Total quality management, benchmarking, BPR 5. Developmental:
Enhancing skills / competencies, training, e-learning 6. Innovation and creation:
Communities, collaboration, virtual teamwork
Web 2.0 for KM
Approaches: • Content management systems • Internal blogs • Micro-blogging: www.yammer.com • Social networks: www.cyn.in, www.ning.com • Wiki
Strategy definition decisions
1. Channel priorities 2. Market and product development 3. Positioning and differentiation strategies 4. Business and revenue models 5. Marketplace restructuring 6. Supply-chain management capabilities 7. Internal knowledge management capabilities 8. Organizational resourcing and capabilities
Organizational resourcing and capabilities
• Decide how organization needs to change to achieve the priorities set for e-business.
• Gulati & Garino (2000): • In-house division (integration) • Joint venture (mixed) • Strategic partnership (mixed) • Spin-off (separation)
• QUESTION: what are the advantages of • Integration • Spin-off?
E-business strategy
1. Strategic evaluation/analysis 2. Strategic objectives 3. Strategy definition 4. Strategy implementation
Strategy implementation
• Planning'• ExecuCon'• Control'
ImplementaCon'
• Supply'chain'management'strategies'(Chapters'6'and'7)'• E.markeCng'strategies'(Chapters'8'and'9)'• Planning,'scheduling'and'change'management'(Chapter'10)'• E.business'analysis'and'design'(Chapter'11)'• ImplementaCon,'maintenance'and'control'(Chapter'12)'
ImplementaCon'issues'
Success or failure
• Failures due to: (Miller, 2003): • Overestimation of adoption • Unrealistic replacement expectations • Timing errors • Lack of creativity • Offering free services • Over-ambition
• Classic mistakes: • Situation analysis • Objective setting • Strategy definition • Implementation
Outline
• Intro • Strategic Analysis • Strategic Objectives • Strategy Definition • Strategy Implementation • Information systems strategy and e-business
strategy
IS strategy vs. e-business strategy
• Question: how does IS strategy supports change? • Business-alignment IS strategy:
• Top-down • How can IS be used to directly support a defined e-
business strategy? • Strategic IS matrix
• Business-impacting IS strategy: • Bottom-up • New opportunities from deployment IS may impact
positively on business strategy? • Redesign business processes? • Value chain analysis
Strategic Information Systems matrix
Strategic Information Systems
Three types of Information Systems: 1. Financial information systems:
• Mechanization and control of financial systems • Accounting, budgeting, HR,…
2. Operational / Service information systems: • Control details and cost effectiveness of business • Ordering, inventory control, planning,…
3. Strategic information systems: • Profound impact on profitability and competitive
advantage • Links/aligns business and computer strategies
Summary
• Key characteristics of an e-business strategy model: • Based on assessment of internal and external
environment • Have clearly defined SMART objectives backed
up by vision • Have strategies, tactics and implementation that
select the best techniques to achieve these strategies
• Have monitoring and control that assess whether the objectives are being achieved and a feedback loop to ensure corrective action occurs.