e-commerce ©david whiteley/mcgraw-hill, 2000

E-Commerce ©David Whiteley/McGraw-Hill, 2000 1

e c o m m e r c e

electronic commerce

strategy

technologies and

applications

Chapter 4: Business strategy

Strategy Formulation

e-Commerce Strategy

e-Commerce Plan

Business Implementation

Technical Implementation

Evaluation

update

revise

improve

Technology Evaluation Business

Environment Business Capability

Business Strategy

Business Strategy


e c o m m e r c e

electronic commerce

strategy

technologies and

applications

Corporate strategy

‘Corporate strategy is the pattern of major objectives, purpose or goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.’

Andrews (1971)


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Strategy formulation Four Stages of Strategy Formulation:

Consideration of environmental changes that bring about new opportunities and pose new threats.

Assessment of the internal strengths and weaknesses of the institution and in particular its ability to respond to those opportunities and threats.

A decision-making process influenced by the values, preferences and power of interested parties.

A strategy generating process concerned with generating options and evaluating them.

Needle (1994)


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Alternative strategies Strategy formulation is both rational and intuitive –

organisations faced with the same environmental circumstances and with similar business capabilities may well develop entirely opposite strategies.

Car assemblers may go for: Volume production that competes on price, or Higher margins in quality and niche markets.

Retailers may choose to: Switch strategy to online selling. Develop their agent network. Enhance traditional retail outlets.

Whatever the selected strategy: Strategy formation is an ongoing process. The strategy needs to become part of the fabric of the

organisation.


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Strategic implications of IT IT – initially used for administrative automation.

ICT (information and communications technology) used for: Intra-organisational systems Inter-organisational systems Public access networks (Internet) Mobile data communications

The use of ICTs can have strategic implications for small and large organisations.


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e-Commerce strategy inputs Traditionally an IT Strategy would be subservient to

the Business Strategy.

For e-Commerce the IT Strategy becomes a central component (or the determinant factor) in Business Strategy.

Inputs to an e-Commerce Business Strategy are: Technology Business Environment Business Capability Existing Business Strategy


e c o m m e r c e

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Technology

e-Commerce technologies:

EDI: Streamline supply logistics. Facilitate decreases in trade cycle times.

Electronic Markets: Redefine the operation of a market sector.

Internet e-Commerce: New direct sales opportunities Novel business to business and business to

consumer applications


e c o m m e r c e

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TechnologyThe organisation Source of business value

Improve it product promotionnew direct sales channeldirect savingstime to marketcustomer servicebrand image

Transform it technological and organisational learningcustomer relations

Redefine it new product capabilitiesnew business models


e c o m m e r c e

electronic commerce

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Business environment

The Economy: The State:

Sets the regulatory framework(For e-Commerce, with a global spread, the effect of state regulation can be ambiguous).

Technology(the topic of the previous section)

The Labour Market: e-Commerce - need special skills. e-Commerce can result in downsizing.

Culture: e-Commerce varies across countries.

All businesses operate within an external environment. Environmental factors that interact with business include:


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Business capability Gap analysis:

‘A knowledge of the resources and an organisation possesses, and what can be done with them, is a prerequisite for future plans and establishes whether a gap exists between what management would like to do and what they can do.’

(Needle, 1994)

e-Commerce needs new skills and, in all probability, alters the ways in which business is done.


e c o m m e r c e

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applications

Existing business strategy

Very possibly the organisation already has a business strategy and this can and should be part of the evaluation of the e-Commerce strategy.


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applications

Strategy formulation The Strategy Formulation is based on the inputs:

Technology Business Environment Business Capability Existing Business Strategy

Strategy Formulation then involves discussion and negotiation – stages can include: Identifying Options Evaluating Options Selecting Strategy

The outputs are: The New Business Strategy An e-Commerce Strategy


e c o m m e r c e

electronic commerce

strategy

technologies and

applications

Strategy Formulation

e-Commerce Strategy

e-Commerce Plan

Business Implementation

Technical Implementation

Evaluation

update

revise

improve

Technology Evaluation Business

Environment Business Capability

Business Strategy

Business Strategy


e c o m m e r c e

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strategy

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applications

e-Commerce implementation Technical implementation:

Ease of Use Functionality Back Office Systems

Business Implementation: Business Infrastructure Marketing


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e-Commerce evaluation Evaluate:

Feedback from Users Feedback from those who gave up?!

Loopback: Improve it Revise it Update it


e c o m m e r c e

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Chapter 4 – Exercise 1

Suggest three advantages and three disadvantages for an organisation in devising and implementing a corporate strategy.


e c o m m e r c e

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strategy

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Chapter 4 – Exercise 2Using the corporate strategy formulation process outlined in Section 4.1:

List environmental changes that bring about new opportunities or pose new threats to the college or university at which you are studying;

Assess the strengths and weaknesses of the institution and its ability to respond to the environmental changes;

Suggest some strategic initiatives that your college or university might take to improve its position in the education market place.

(If appropriate an alternative trade sector can be selected as the subject of the study. Possible organisations include the student union, the local bus company or any other organisation with which the student has familiarity).


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Chapter 4 – Exercise 3 Moving onto e-Commerce, review Bloch’s ten

points of business value and suggest how each might apply to the promotion of your college or university.



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Chapter 4 – Exercise 4 Using the material from the proceeding exercises,

suggest how the college or university might further promote itself using the Internet. (Note that the institution probably already has a web page and the requirement is for imaginative new initiatives over and above this provision.)
