E-Business Strategy

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In order to define e-business strategy we focus on two views. One view defines strategy as plans and objective adopted to achieve higher level goals. In that sense a strategy is developed to achieve a goal like implementing organizational change, or a large software package such as an ERP-system. Strategy may also relate to plans concerning the long term position of the firm in its business environment to achieve its organizational goals. Thus strategy defines the future direction and action of an organization.

Through strategic planning an organization defines its fundamental relationship with stake holders, such as customers, competitors, suppliers, stockholders, employees, the government, the public etc. E-business strategy should support not only corporate strategy objectives but also various functional strategies, like marketing and SCM. The connection between e-business and other strategies, such as functional which encompass SCM, HR and information system(IS) strategy is shown in figure.

Corporate Strategy

E-Business Strategy

Functional Strategies SCM, Marketing, HR

IS Strategy

In the above strategy functional strategy and information system(IS) strategy combine to form corporate strategy. Double ended arrow indicate the relationship between strategies and imply that strategies will inform and impact each other. SCM strategy is based on value chain analysis for decomposing an organization into its individual activities and determining value added at each stage. SCM also requires an understanding of the procurement process an d its impact on cost savings and implementation.

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Its aim is to integrate e-procurement with suppliers. Marketing strategy is concerned with the market environment to create a value for the firm by improving economic performance. It focused on capturing market share or improving profitability through investment and efficient contracts. Marketing is based on a demand analysis, which examines current and projected customers use digital channels within different target markets.

Information System Strategy(IS) is a set of goals and plans with regard to the use of information systems in an organization to support the objectives of that organization in the long run. IS consists of 2 components: Demand Strategy Supply Strategy. Demand Strategy defines the requirements or demand for information and information system from a business point of view. This is also called the Information Strategy.

The supply strategy is called IT strategy which outlines how the companys demand for information systems will be supported by technology including hardware, software, networks and also services like software development and user support. The basic goal of Information Strategy is to ensure the alignment of information systems and technology development with enterprise priorities.

It helps an organization transform the way it interacts with customers, suppliers, employees and partners by developing an information technology strategy that integrates company business planning initiatives, optimize current technology investments, incorporates new information management technologies etc. The IS strategy and its Information Technology strategic plan serves as a road map to guide capital investments over a multi-year period.

Strategic Positioning
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Companies can becomes more profitable than the average performer in the industry sector by achieving a sustainable competitive advantage. i.e.) by operating at a low cost, by commanding a premium price, or by both. One way of achieving cost and price advantages is through strategic positioning. Strategic positioning means that the company is doing things differently from its competitors, in a way that delivers unique type of value to its customers.

This means offering a different set of products, a different type of services, or different logistical arrangements. A researcher named porter suggests 6 fundamental principles that companies need to follow in order to establish and maintain a strategic position. They are: A company must start with a right goal. A companys strategy must enable it to deliver a value proposition.ie) it defines a way of competing that delivers unique value for a particular set of customers.

Company strategy needs to be reflected in a distinctive value chain. i.e.) to establish a sustainable competitive advantage, a company must perform similar activities in different ways. Robust company strategy include trade off. i.e.) company may have to abandon or relinquish some product features, services, or activities in order to be unique at others.

Company strategy defines how all the elements of a company fit together. Company strategy involves continuity of direction. Without continuity of direction, it is difficult for companies to develop unique skills and assets or build strong reputations with customers.

Levels of e-business strategy ey

Strategies will exist at different levels of organization. Strategic levels of management are concerned with integrating and coordinating the many activities of an organization so that the behavior of the whole is optimized.

E-business use 3 levels of strategy. They are:  The supply chain or industry value chain level  The line of business or business unit level  The corporate or business enterprise level
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The supply chain or industry value chain level y E-business requires a view of the role, added value, and position of the firm in the supply chain. Important issues addressed here are:  who are the firms direct customers?  what is the firms value proposal to those customers?  who are the suppliers?  how does the firm add value to those suppliers?  what is the current performance of the industry in terms of revenues and profitability?
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what are the current problems in the chain? These are the issues that are need to be effectively addressed in order to understand the current an future position of the firm in the chain. This analysis creates an understanding of how a firms position in the chain might potentially be affected by new internet based technologies.

The line of business or business unit level

Understanding the position in the value chain is a starting point for further analysis of how internet related technologies could contribute to the competitive strategy of the individual line of business. y There are 4 strategies for achieving a profitable business. They are:  Differentiation  Cost  Scope  Focus.
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Differentiation strategy refers to all the ways of producers can make their products unique and distinguish them from those of competitors. Adopting a strategy for cost competition means that a company primarily competes with low cost . Customers are primarily interested in acquiring a product as inexpensively as possible. A scope strategy is a strategy to compete in markets worldwide, rather than merely in local, regional or national markets. A focus strategy is a strategy to compete within a narrow segment or product segment.

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The corporate or business enterprise level

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Enterprise level for each firm that encompasses a collection of (strategic) business units. This level address the problem of synergy through a firm-wide, available common IT infrastructure.

Commonality of e-business applications is basically needed for 2 reasons.  Efficiency  Effectiveness.

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From Efficiency point of view, having different applications for the same functionality in different Lines of business is needlessly costly. From Effectiveness point of view, there is the need for cross Line of business communication and shareability of data.