Internet strategies for

existing firms
Presented by: Sayli Paringe
Lei Wang
What is Business Strategy?

Johnson and Scholes (Exploring Corporate Strategy) defin

e strategy as follows:

"Strategy is the direction and scope of an organisation over th

e long-term: which achieves advantage for the organisation t
hrough its configuration of resources within a challenging env
ironment, to meet the needs of markets and to fulfill stakeho
lder expectations".
Strategy at Different Levels of a Business

Strategies exist at several levels in any organisation - ra

nging from the overall business (or group of businesse

s) through to individuals working in it.
• Corporate Strategy

• Business Unit Strategy

• Operational Strategy
Strategic Analysis
This is all about analyzing the strength of businesses' position and und
erstanding the important external factors that may influence that posit
ion.
PESTEL
Scenario Planning
Five Forces Analysis
Market Segmentation
Directional Policy Matrix
Competitive strategy
Critical Success Factor Analysis
SWOT
e-commerce
“The Sharing of business information. Maintaining th

e business relationships and conducting the business t

ransaction by means of internet based technology.” (P
oon & Swatman, 1999).
electronic commerce

Retailers bring their Internet strategies many advantages in

going online.
I. Becoming multichannel retailers

II. Available resources (financial or in terms of market knowle

dge)

III. Minimize the cost

IV. In order fulfillment and distribution infrastructure (Doolin

et al, 2003).
 Strategy is about
winning, Internet
Strategy is about
winning online.
Source: http://www.webwings.com.au/internet-strategy.html
Two types of existing firms needs Internet st
rategy

 New Firm Who entering Existing Firm using e-co

in a market directly usin mmerce as a tool for enh
g e-commerce. ancing the business.
Also known as e-tailers.
Ex: boo.com
A two dimensional framework for compa
nies adopt Internet technology (Doolin et
al., 2003).

1. Channel Management
2. Business Transformation
Channel management
“The use of the Internet as a marketing channel to sup
port and reinforce existing traditional sales channels
The separate development of an Internet-based sales c
hannel, recognizing the different competencies requir
ed for Internet retailing, or to exploit a different produ
ct
The integration of Internet-based sales into the existin
g retail operation, providing customers with a seamles
s retail storefront that enables them to move from one
channel to another” (Doolin et al., 2003).
Business Transformation
Three major approaches

1. Evolutionary change
2. An experimental strategy
3. Revolutionary change
The combination of types of Internet channel management and th
e scope of business transformation involved

Source: Doolin et al, (2003).

Two comparison case study tables (1)
Alpha Co Beta Co Gamma Co Delta Co
Retail Apparel Consumer General Groceries
Market Electronics Merchandise

Revenue 100 130 800 1,600

NZ $million
Products 600 10,000 600 14,500
Online

Channel Integrated Support Support Separate

Management Integrated Separate

Business Experimental Evolutionary Evolutionary Experimental

Transformation
Revolutionary
Internet Strategy: Spectrums for existin
g Business
Spin Off
A separate division, Altogether different entity of busi

ness.
Able to speed up its decision making.

Maintain a high degree of flexibility.

Disadvantageous

Ex: Barnes and Noble

In-House
Expand business with integration of Bricks and Clicks.

Create a new channel which would get plugged to the existing

business architecture.
Suitable for firms who already have developed internal systems

Office Depot.com

Any Other Example?

Strategic Partnership
 Strategic Partnership between Right Aid andDrugstore.com

 Right Aid bought 25% od Drugstore.

Help to promote each other.

More flexibility to the customer.

Maintain individual brands and share a huge amount of traffic both onli

ne and in stores.
Joint Venture
 Joint Venture between KB toys (80%) and BrainPaly.com(20

%)
Kbkids

Joint venture with existing e-tailer.

Leverages KB brand name without losing flexibility

Independent management teams

Online store provide growth and Physical store: Scale.

Example
New Zealand companies

Group online shopping websites

www.grabone.co.nz

www.groupy.co.nz
Example
Amazon.com

Internet strategy: long tail (Pareto principle or 80-20 r

ule).

Picture from
http://www.escapethematrix
.net/blog/the-long-tail-
theory/569/
Example
Protect online trade safety

www.taobao.com

Sellers
Buyers

The third party


Why move to the Internet?
 Properly applied as a business tool, t
he Internet has the capability to:
 Make your employees more producti
ve and effective
 Reduce your cost of doing business
 Increase your competitive advantage
 Improve communications within you
r company
 Improve communications between y
our company and its suppliers
 Improve communications between y
our company and its customers
Source: http://management.about.com/library/weekly/aa022498.htm
Reasons to not move to The Inter
net
 If you do not have a strategy, and just
allow the Internet to seep into your b
usiness practice, the Internet can have
negative impacts on your bottom line,
because the Internet:
 Has a lot of data, but the relevant info
rmation can be hard to find
 Can cost a lot of money to get started
 Can cause people to waste a lot of time
by just “surfing” the Internet
 Can allow outsiders to sneak into your
company’s data
 Requires skills that your present staff
may not have
Conclusion
Increased integration of clicks and bricks process is inhibited by bu

siness and technology barriers.

non clear objectives for adopting Internet strategies.

Technology, social and economic barriers.

Tends to automate the existing business strategies rather than repla

cing.

Direct or Indirect relations can be found between bricks and clicks.

Activity (Answer the questions)
Handout
Quiz
Reference
 Doolin, B. et al. (2003) Internet strategies for established retailers: four New Zealand case studies. Jour
nal of Information Technology Cases and Applications 5(4): 3-20
 Barnes, D., et al. (2004) Managing the transition from bricks-and-mortar to clicks-and-mortar: a busi
ness process perspective. Knowledge and Process Management 11(3): 199-209.
 Gulati, R. & Garino, J. (2000) Get the right mix of bricks & clicks. Harvard Business Review 78(3): 107-1
14.
 Prasarnphanich, P. & Gillenson, M.L. (2003) The hybrid clicks and bricks business model. Communic
ations of the ACM 46(12): 178-185.
 http://www.escapethematrix.net/blog/the-long-tail-theory/569
 http://www.webwings.com.au/internet-strategy.html
 http://management.about.com/library/weekly/aa022498.htm