Chapter 13

E-Strategy, Internet
Communities and Global EC
Learning Objectives
Describe the importance and essentials of
business and EC strategies
Describe the strategy planning process for EC
Understand the strategy formulation process
Evaluate the issues involved in global EC

Need for a Strategy [2]
Why does a company need an e-
strategy?
Fast changes in business and technology
means opportunities and threats can change
in a minute
Company must consider EC strategy that
includes contingency plans to deal with
changes
May be too costly not to have one
Essentials of a Business Strategy
Strategy: a broad-based formula for how a
business is going to compete, what its goals
should be and what plans and policies will be
needed to carry out those goals
Strategy: search for revolutionary actions
that will significantly change the current
position of a company, shaping its future
Finding the position in marketplace that best fits the
firms skills
Companys choice of new position that must be driven
by its ability to find new trade-offs and leverage a new
system of complementary activities into sustainable
advantage
The Elements of a Strategy
Forecasting
Forecasting the business, technological, political,
economic, and other relevant environments
Resource allocation
Human, financial, technological, managerial or
knowledge-based
Core competency
Refers to the unique combination of the resources
and experiences of a particular firm
Example: a core competency of amazon.com is to
sell books onlinewww
The Elements of a Strategy [2]
Environmental (industry) analysis
Involves scanning the business environment
and collecting and interpreting relevant
information
Company analysis
Includes the business strategy, the
capabilities, the constraints and the strengths
and weaknesses of the specific company
Business planning
Refers to the plan of how to get from the
current position to the desired one

The Landscape of EC Strategy
Strategy Initiation
First step is to review the organizations business
and IT vision and mission
Then, a vision and mission for EC can be
generated
Although these statements are usually very vague,
they provide a springboard for generating more
specific goals and objectives
Begin with industry and competitive analysis
Industry Analysis
Analyze position of the company in its
industry and the competition
Required for assessing the changes that
EC project may introduce and its chances
for success
Industry Assessment
What industry is the EC
initiative related to?
Who are the customers?
What are the current
practices of selling and
buying?
Who are the major
competitors? (How intense
is the competition?)
What e-strategies are
used, by whom?
How is value added
throughout the value
chain?
What are the major
opportunities and
threats?
Are there any metrics or
best practices in place?
What are the existing
and potential
partnerships for EC?
Company Analysis
Source: Hackbarth and Kettinger (2000), p. 85. Reprinted with permission of William J. Kettinger.
Industry and Competitive Analysis
Monitoring, evaluating, disseminating of
information from the external and
internal environments
SWOT Analysis
Strengths
Opportunities
Weaknesses
Threats
Strengths (S)
Weaknesses (W)
Opportunities (O)
Threats (T)
INTERNAL
FACTORS
EXTERNAL
FACTORS
SO Strategies
Generate strategies
here that use
strengths to take
advantages of
opportunities
WO Strategies
Generate strategies here
that take advantage of
opportunities by
overcoming weaknesses
ST Strategies
Generate strategies
here that use
strengths to avoid
threats
WT Strategies
Generate strategies
here that minimize
weaknesses and
avoid threats
SWOT Diagram
Competitive Intelligence on the Internet
Internet can play a major role as a
source of competitive information
(competitive intelligence)
Review competitors Web sites
Analyze related newsgroups
Examine publicly available financial
documents
Ask the customersaward prizes to those
who best describe your competitors strengths
and weaknesses

Competitive Intelligence on the Internet

Current company information is available in their
press releases and information published on their
Web sites
Push technology services used to keep
companies up-to-date by finding information
for them
Examine chat rooms


Competitive Intelligence on the Internet [3]
Overreliance on such information can be
dangerous
Using publicly available search engines is free, but
may produce lots of irrelevant information
Searches should not replace in-depth background
research
Business intelligence companies offer packaged
competitive analysis
Risk analysis
Stock market analysts reports

Strategy Formulation
Strategy formulation
Development of long-range plans
Organizations mission
Purpose or reason for the organizations existence
3 main reasons for establishing Web site
MARKETING, CUSTOMER SUPPORT, and SALES
Products with good fit for EC
Shipped easily or transmitted electronically
Targets knowledgeable buyers
Price falls within certain optimum ranges
EC Opportunities
3 common mistakes in allocating EC
investment
Let a thousand flowers bloomfund many
projects indiscriminately
Bet it allput everything on a single high-
stake initiative
Trend-surffollow the crowd toward the next
big thing
All of the above can be risky and
costly
EC Opportunities [2]
Problem-drivenattempt to solve a
problem such as:
Excess inventory
Delivery delays
Technology-driventrying to use existing
applications
Find problems no one knew existed
Used by first movers
Approaches to finding individual EC initiatives
EC Opportunities [2]
All can fail
Market-drivenwaiting to see what the
competitors will do
Fear or greed-driven
Afraid if they do not practice EC they will be
big losers
Think they can make lots of money going
into EC
Approaches for Finding EC Opportunities
Uncovering Specific EC
Opportunities and Applications
Understand:
How digital markets operate
How Internet customers behave
How competition is created and what
infrastructure is needed
What the dynamics of EC are
Map opportunities that match current
competencies and markets
Many opportunities to create new products and
services
Return on Investment (ROI)
Return on Investment and Risk
Analysis
A ratio of resources required and benefits generated by
an EC project
Includes both quantifiable items (cost of resources,
computed monetary savings) and Non-quantifiable items
(intangibles)
Some intangible benefits
Effective marketing channel
Increased sales
Improved customer service
Strategic Planning Framework
EC appears in three levels:
Level 1: Basic presencecompany uses the
Internet to feature company information and
provide brochures
Level 2: Prospectingfeatures added
Search engine
Extensive product information
Links to services
Ability to interact with the company
Basic customer service
Strategic Planning Framework [2]
Level 3: Business integrationmore features
added
EC transaction capabilities
Customization and personalization services
Tools fostering creation of a community
Level 4: Business transformationsupplier
and customer integration added
Multichannel integration
Advanced customization and configuration
Superb customer service
Strategy Implementation
Development of detailed, short term
plans for carrying out the projects
agreed in strategy formulation
Specific activities and outcome:
Project planning
Resource Allocation
Project Management
Strategy and Project Assessment
Need for assessment
Find out if EC project delivers what it was
supposed to deliver
Adjust plans if necessary
Determine if EC project is still viable
Reassess initial strategy in order to learn from
mistakes and improve future planning
Identify failing projects as soon as possible
and determine reasons for failure
Strategy and Project
Assessment [2]
Measuring results; watch for:
Goals may be unrealistic
Web server was inadequate to handle demand
Expected cost savings were now realized
Exploding application requests from various
functional areas in the company may follow
Review requirements and design documents
Develop thorough checklist
Pose a set of questions to assess impact of EC
project
Strategy and Project
Assessment [3]
Finalization and adjustments
Actual ROI can be computed and compared
to the projected one
If sales expectations were not met, review
marketing efforts
Web assessment based on collected
information
Corrective steps might be required
Product offerings to pricing strategy
Web promotion to review software vendors
EC Failures and Lessons Learned
E-Tailing failures
Lack of funding
Incorrect revenue model
Exchange failures
Revenue growth too slow
Need to move to new business model
etc...
The Future of Electronic Commerce
Nontechnical Success Factors
Internet usage
Increase exponentially
Access via cell phones!
Opportunities for buying
Increase rapidly
M-commerce
No need for a computer brings more people to the
web
Purchasing incentives
Increase buyers advantages

The Future of Electronic Commerce [2]
Increased security and trust
Significant improvement is expected
Efficient information handing
Accessible from anywhere
Innovative organizations
Restructured and reengineered
Virtual Communities
Spreading rapidly
Payment systems
Ability to use e-cash cards and make micropayments is getting
close to reality
Business-to-business (B2B EC)
Continues to grow rapidly

The Future of Electronic Commerce [3]
Auctions
Increasing rapidly
Going global
Most appealing benefit of EC
E-government--comprehensive
Government-to-consumers (G2C)
Government-to-government (G2G)
Government-to-business (G2B)
Government-to-employees (G2E)
Intrabusiness EC
Improving internal supply chain
E-learning



Exercise
List and define the four most common
approaches used by companies in
discovering EC opportunities!
Define strategy and list three elements of
a strategy!