COMP7880: E-Business Strategies
Summary and Outlook
Dickson K.W. Chiu
PhD, SMIEEE, SMACM, Life MHKCS
1
3 main steps of e-business strategy
Mobile e-commerce strategy
E-business strategy
Strategy
Strategy formulation
implementation
12
Strategic
analysis
3
External
analysis
9
5
Internal
organisation
Strategy
options
Opportunities/
threats
Strengths/
weaknesses
4
Internal
analysis
6
Sustaining
competitive
advantage
8
7
Exploring
new market
spaces
Creating and
capturing
value
10
13
Interaction with
suppliers
Implementation
11
Interaction with
users/customers
COMP7880-Intro-2
Hierarchy of Goals
Company vision
Mission statements
Strategic objectives
COMP7880-I/E-3
E-business strategy formulation
SWOT Analysis
Key environmental/
industry developments
Opportunities
Strengths
Firm
characteristics
Weaknesses
Internal
Analysis
External
Analysis
Threats
• Do we have
the strengths to
seize possible
opportunities?
• Do we have
the strengths to
fend off possible
threats?
• Which opportunities
do we miss because
of our deficits?
• To which threats do
our weaknesses
expose us to?
COMP7880-I/E-4
Porter’s 5 force model
Potential entrants
Threat of
new entrants
Industry competition
Suppliers
Bargaining power
of buyers
Rivalry among
existing firms
Bargaining power
of suppliers
Buyers
Threat of
substitutes
Substitutes
One assumption of Porter’s five forces model is that some industries are inherently more
attractive than others; i.e., the profit potential for companies in that industry is higher.
As this figure indicates, the interaction and strength of five forces influences profitability.
Source: Adapted from M. Porter (1998), p. 4.
COMP7880-I/E-5
Complementing Porter’s model:
Co-opetition value network framework
Supplier
Competitors
Firm
Complementors
Buyer
Source: Adapted from A. Brandenburger and B. Nalebuff (1998), p. 17
COMP7880-I/E-6
How the Internet impacts all activities in
value chain (Support Activities)
Firm Infrastructure
• Web-based, distributed financial and ERP systems
• On-line investor relations (e.g. information dissemination, broadcast conference calls)
Human resource management
• Self-service personnel and benefits administration
• Web-based training
• Internet-based sharing and dissemination of company information
Technology development
• Collaborative product design across locations and among multiple value-system participants
• Knowledge directories accessible from all parts of the organisation
• Real-time access by R&D to online sales and service information
Procurement
• Internet-enabled demand planning
• Other linkage of purchase, inventory, and forecasting systems with suppliers
• Direct and indirect procurement via marketplaces, auctions and buyer-seller matching
Web-distributed supply chain management
Source: Reprinted from M. Porter (2001)
COMP7880-I/E-7
How the Internet impacts all activities in
value chain (Primary Activities)
Inbound logistics
• Real-time integrated
scheduling, shipping,
warehouse
management, demand
management &
planning, and
advanced planning &
scheduling across the
company and its
suppliers
• Dissemination through
out the company of
real-time inbound and
in-progress inventory
data
Operations
• Integrated information exchange,
scheduling and
decision making in
in-house plants
and components
suppliers
Outbound logistics
• Real-time transaction of
orders
• Automated customerspecific agreements
and contract terms
• Customer and channel
access to product
development and
delivery status
• Collaborative
integration with
customer forecasting
systems
• Integrated channel
management
Marketing and sales
• Online sales channels
including web sites and
marketplaces
• Real-time inside and
outside access to
customer information,
product catalogues,
dynamic pricing,
inventory availability,
online submission of
quotes, and order entry
• Online product
configurators
• Customer-tailored
marketing via customer
profiling
After-sales service
• Online support of
customer service
representatives
• Customer selfservice via websites
and intelligent
service request
processing
• Real-time field
service, access to
customer account
review, work-order
update, etc.
Web-distributed supply chain management
Source: Reprinted from M. Porter (2001)
COMP7880-I/E-8
2 generic approaches of
competitive advantage
Unique product
with price
premium
Goal of the companyBusiness strategy
something
Performance Provide
that is valuable
advantage unique
to buyers
Differentiation
Competitive
advantage
Price
advantage
Similar product
with lower
price
Provide a product
with lowest price
Cost leadership
(Cost/price leadership)
Become the cost
leader in the industry
Source: Adapted from H. Hungenberg (2006), p. 189.
COMP7880-SO-9
E-business strategy changes based on
SWOT Analysis
COMP7880-SCA-10
Alternative positioning for
services / products / price
COMP7880-SCA-11
Reasons favoring ‘make’ or ‘buy’
decisions
Reasons favouring
‘make’ decisions
Reasons favouring
‘buy’ decisions
Strong linkage between
activities
High economies of scale
Confidentiality of
information
High transaction costs
High capital requirements
Specialized know-how
Higher efficiency of the open
markets
Think: how does IT impacts?
Separation vs integration
Separate organization
Integrated organization
• Greater focus
• Established and trusted brand
• More flexibility and faster
decisions
• Shared information
• Entrepreneurial culture
• Access to venture capital
Source: R. Gulati and J. Garino (2000), pp. 107-114
• Cross-promotion
• Purchasing leverage
• Distribution efficiencies
• Shared customer service
Think: how does IT impacts?
Different imperatives regarding
economics, culture, and competition
Businesses
I
m
p
e
r
a
t
i
v
e
s
Economics
Culture
Competition
Product
innovation
Customer
relationship
management
Infrastructure
management
Early market
entry allows for
a premium price
and a large
market share;
speed is the key
High cost of
customer
acquisition makes it
imperative to gain
large shares of
wallet; economies
of scope are the
key
High fixed costs
make large
volumes essential
to achieving low
unit costs;
economies of
scale are the key
Employee
centered;
coddling the
creative ‘stars’
Highly service
oriented;
‘customer
comes first’
Cost focused;
stress on
standardization,
predictability,
efficiency
Battle for talent;
low barriers to
entry; many
small players
thrive
Battle for scope;
rapid consolidation;
a few big players
dominate
Battle for scale;
rapid
consolidation; a
few big players
dominate
Source: Adapted from J. Hagel and M. Singer (1999).
Supplier interaction strategies

Pull




Push



Allocates production to stocking locations based on overall demand
Encourages economies of scale in production
Just-in-time



Draws inventory into the stocking location
Each stocking location is considered independent
Maximizes local control of inventories
Attempts to synchronize stock flows so as to just meet demand as it occurs
Minimizes the need for inventory
Supply-Driven



Supply quantities and timing are unknown
All supply must be accepted and processed
Inventories are controlled through demand
COMP7880-IS-15
Importance of suppliers

Inventories is a major use of capital in the supply channel.




Purchasing and scheduling involve decisions that affect the
efficient movement and storage of goods.




Key tradeoff: lead time, demand, service, cost
Key difficulties: demand uncertainty together with lead time
Push vs pull
Just-in-time scheduling procedures become popular
Toyota’s KANBAN and MRP scheduling
Combining Distribution and Materials Requirements Planning
(DRP and MRP) allows integration of the supply chain from
suppliers to customers.
Purchasing is important, accounting for 40-60% of dollar
sales typically.


Impact on the efficiency of logistical activities
Key purchasing decision: quantities, timing, and sourcing
COMP7880-IS-16
Customer relationship management
consists of four elements
'What criteria
determine who will
be our most
profitable
customers?'
1
Customer
selection
2
Customer
acquisition
'How can we
acquire this
customer in the
most efficient and
effective way?'
Customer
relationship
management cycle
4
'How can we Customer
extension
increase
the loyalty and the
profitability of this
customer?'
3
Customer
retention
'How can we keep
this customer for
as long as
possible?'
COMP7880-IC-17
A Conceptual Model of a Decision Model
for Recommendation
Recommendation
for
make
Service
Provider
Persuasiveness
pM = fp(ri, tij, uM)
Trustworthiness
Utility
expects
Customer
uM
perceives
Risk Attitude
tij = ft(impij, repij, rij)
ri
affects
Reputation
k = nij
repij =
k =1
 Wik  impij
Personalized
Recommendation
nij
Impression
impij = fi(∑gainij, ∑lossij, pij, nij)
ICEC2005-18
Research Questions and Objectives

At the long-term strategic level:



At the tactics level regarding individual recommendations:



How can a service provider build up its reputation? How costly it
could be?
How does recommendation quality affect the service provider’s
reputation?
How important is the utility of a recommendation to a customer for
accepting it?
How important is a service providers’ reputation and impression to
a customer for accepting a recommendation?
At the operations level:

How can a quantitative decision model help operations, particularly
for the construction of decision support systems for making
effective personalized recommendations?
Personalized
Recommendation
ICEC2005-19
E-marketing strategy essentials



E-marketing strategy is a channel strategy
Objectives for online contribution %
- sales, service, profitability should drive our strategy
E-marketing strategy defines how we should:
1.
2.
3.
4.
Communicate benefits of using this channel
Prioritise audiences targeted through channel
Prioritise products available through channel
Hit our channel leads & sales targets



Acquisition, Conversion, Retention
Channel strategies thrives on differentials
BUT, need to manage channel integration
COMP7880-IC-20
Segmentation method
Measurable
It should be possible to measure the size of a
defined segment in order to determine its
purchasing power and its peculiar
characteristics
Substantial
A segment should be large enough to
justify that it is addressed separately
Differentiable
The segments must be exclusive and react
differently to a variety of marketing
approaches
Actionable
It should be possible to develop sales and
marketing approaches to serve specific
segments.
Source: Kotler, (2005).
Networking
frequency
‘Long tail’ of social networking provides access
to previously inaccessible market niches
Contact
pool
acessible
via
traditional
networking
tools
Source: Adapted from Anderson C. (2006).
Additional
network
potential of
online
networking
Contacts ranked by
frequency
COMP7880-IC-22
Comparison between E-commerce and Mcommerce (Elliott, Phillips, 2004 )
Factor
E-Commerce
M-Commerce
Product or service
focus
Product focus
Service focus
Product or service
provision
Wired Global access
Wireless Global
access
Product or service
assets
Static information and
data
Dynamic locationbased data
Product or service
attraction
Fixed non-timeconstrained access
Mobility and
Portability of access
M-Commere Strategy
23
Comparison between E-commerce and Mcommerce Barnes And Huff, 2003; Elliott, Phillips, 2004
Factor
E-Commerce
M-Commerce
Personal Devices
PC: Medium
Mobile phone : High
Network Operators can
determine the services
No
Yes, like a gatekeeper
Usage and Applications
will charge
No standard way to
charge; PC is
essentially free
Users seem prepared to pay a
‘mobility premium’
User’s Location
Hard to find
Network Operator know who you
are, where you are, can direct you
to the portal of choice, and can
charge you money
Reverse Billing
No
Yes, in which services are charged
directly to the user’s phone bill
Display Screen Size and Medium
Memory
Small
Click through rates for
banner AD and e-Mail
(i-mode)
3.6%; 24%
PC Less than 0.5%
M-Commere Strategy
24
Obstacles to M-commerce
(Elliott, Phillips, 2004 )




Efficient and fast wireless telecommunications services
are often focused within specific area
Wireless Mobile Internet access more costly than wired
Internet access
Concerns over privacy and security still pervade the
wireless data transmission world
Many individuals and organizations still harbor
concerns over the health issues of wireless technology
Note changes in environment since this 2004 view.
M-Commere Strategy
25
The development of M-commerce

In Europe and Japan



In USA



Focus on delivering to the customer technology, such
as internet –enable mobile phones, and the provision
of Mobile Internet services
Europe view: Lifestyle consideration
Focus on the use of palm computers, other mobile
devices (e.g. the BlackBerry mobile E-mail devices),
and other wireless technology to improve the
effectiveness of business systems process
USA view: Support mobile working
Currently both are important
M-Commere Strategy
26
Impact of wireless technologies on the
value chain
Firm Infrastructure
• Mobile financial and ERP systems, incl. legal and government information
• Mobile investor relations (e.g. information dissemination, broadcast conference calls, alerts)
• Voice-to-data conversions: mobile forms-based applications, multimedia cellular and wireless broadcast
• Mobile services: rich voice (image, video), Internet (intra/extranet), messaging (SMS, MMS, LBS) and content
• Mobile access to e-mails, personal information management
Human resource management
• Mobile activities in recruiting, hiring, training, development and compensation
• Mobile self-service personnel and benefits administration, incl. mobile time and expense reporting
• Mobile sharing and dissemination of company information
• Mobile services via HRM: voice guidance, messaging (SMS, MMS, LBS push or pull), internet and infotainment
Technology development
• Mobile teams, distributed collaborative product design across locations and among multiple value-system
participants
• Knowledge directories accessible from any location
• Real-time access by R&D to mobile sales and service information
Procurement
• Mobile demand planning and fulfilment
• Other mobile linkage of purchase, inventory, and forecasting systems with suppliers and/or buyers
• Mobile direct and indirect procurement via marketplaces, exchanges, auctions, and buyer/seller matching
Mobile SCM
Source: Adapted from Dan Steinbock (2005), p. 260.
Mobile CRM
Impact of wireless technologies on the
value chain
Operations
Inbound Logistics
Mobile activities
Mobile activities in
associated with
receiving, storing and transforming inputs
disseminating inputs to into final
products/services
products/services
Outbound Logistics
Marketing and sales
Mobile activities
Mobile activities with
associated with collecting,means for buyers to
storing and distributing purchase products/
products/services to
services and inducing
buyers
them to do so, incl.
advertising, promotion,
• Mobile scheduling, • Mobile
• Mobile order
sales force, channels,
shipping,
information
processing and
pricing
warehouse/demand exchange,
scheduling
management and
scheduling and
• Mobile delivery vehicle • Mobile sales channels,
planning and
decision making
operation
e.g. websites,
scheduling across
in in-house
• Mobile
marketplaces
the company and
plants, contract
customer/channel
• Mobile access to
its suppliers
assemblers, and
access to product
customer information,
• Mobile distribution
components
development and
product catalogues,
across the
suppliers
distribution status
order entry
company of real• Mobile
• Mobile channel
• Mobile product/service
time inbound and
available-tomanagement, incl.
configurators
in-progress
promise
information exchange, • Mobile push/pull
inventory data
information to
warranty claims,
advertising
sales force and
contract management • Mobile surveys, optchannels
(versioning, process
in/opt-out marketing,
control)
and promotion
response tracking
Mobile SCM
Source: Adapted from Dan Steinbock (2005), p. 260.
After-sales service
Mobile activities
associated with
providing service to
enhance or maintain
the value of
product/services
• Mobile support of
customer service
reps (incl. voice
guidance, SMS,
MMS, LBS, e-mail,
billing, co-browse,
chat, VoIP, video
streaming)
• Mobile customer
self-service via
portals and mobile
service request
processing, billing,
shipping etc.
• Mobile field service
access to customer
account review
Mobile CRM
Impact of wireless technologies on
the industry’s five forces
Barriers to
entry
Bargaining power
of suppliers
(+/–) Procurement using mobility
tends to raise bargaining power
over suppliers (e.g. Wal-mart and RFID),
though it can also give suppliers access
to more customers
(+/–) Mobility provides a channel
for suppliers to reach end users,
reducing the leverage of intervening
companies, but it may also provide a direct
channel to industry rivals and thus disintermediate channels
(+/–) Mobile procurement and mobile
markets tend to give all companies
equal access to suppliers, but they can also
be used to create privileged access to some firms
(+/–) Mobility can gravitate procurement to standardised
products that reduce differentiation, but it can also
be deployed to diversify products/services, which
increases differentiation
Source: Adapted from Dan Steinbock (2005), p. 266.
Rivalry among
existing competitors
(+) Increases barriers to entry by eliminating
waste and contributing to efficiencies
(+/–) Mobile applications are difficult to
keep proprietary from new entrants, but
consolidation favours incumbents
(–) A flood of new entrants has come
into many new industries
Bargaining power of
channels and end users
(–/+) Reduces differences among
competitors as offerings are
(+) Complements
(–) Shifts
powerful
bargaining
difficult to keep proprietary, but increases
channels
and
power
to
the potential for efficiencies
can
improve
end
consumers
(–/+) Migrates competition to price, but can
bargaining (+/–)
increase potential for differentiation
Increases/decreases
(–) Widens the geographic market,
power over
switching
increasing the number of competitors
traditional
costs
channels
(–) Lowers variable cost relative to fixed
cost, increasing pressure for price
discounting
(+) By making the overall industry
more efficient, Mobility can
expand the size of the market
Threat of substitute
(+) The proliferation of mobility approaches
products or services
creates complementary opportunities,
rather than substitution threats
New Rules of Marketing in Web 2.0
Old Rules
 Marketing = advertising




New Rules
 Marketing = advertising +
PR + thought leadership.
 Media shift from TV and
Creative messaging via
print to social media via the
broadcast interruption
Web.
Designed to appeal to the
 Timely delivery of detailed
masses
information on demand
1-way messaging:
 2-way interactive dialogue;
company to consumer
audience participation.
Focus on selling products  You are what you publish;
content = king.
or services.
COMP7880-W2-30
Business Objectives for Social Media






Brand Building / Reputation Management
Improved Search Engine Rankings
Increased Visitor Traffic to Website
Stay Connected with Peers and Colleagues
Relationship Marketing
Word of Mouth Marketing
COMP7880-W2-31
Strategic IT applications





Much domain knowledge is required.
Note the data / information requirements and how IT helps
to collect / integrate the data for calculations and decision
making.
Capture forecasting, ordering, CRM signals (either
determined by a business analyst or automatically by a
sub-system) as events / exceptions / alerts and forward
them to the appropriate system and personnel for decision
/ action.
Effective collaboration with retailers and suppliers requires
much new IT in the process and information integration, as
well as relying on integrating with existing enterprise
systems (e.g., MRP / DRP).
Note the difficulties in integrating with multiple suppliers,
especially dynamic ones.
COMP7880-IS-32
A Three-Layered Architecture for B2B
Collaboration
Enactment
Requirements
Workflow
Processes
Enforcement
Requirements
Enforcement
Policies
Relationship Management
Requirements
Relationship
Policies
ECA Rules
Enterprise
JavaBeans
Web Services
Collaboration
Requirements
Business Rules
System Design
eService
Collaboration-33
System Architecture based on ECA rules




Database
Other
Collaboration
Parties
Internet
Requirement
Enforcer
ECA rules
Event Repository
Event Subscribers List
Business Entities
Collaboration Process
Enactor
Event Adapter
Timer
Event
Event

Motivated by the active database paradigm
Event - occurrence of something interesting to the system itself or to
user applications
Event driven execution of rules in event-condition-action (ECA) form
ECA (active) rules: On event if condition then action
Exceptions and alerts are events too (action = handler)
Ensure efficiency and timeliness - monitor becomes only active when
an interesting event occurs
Event

Web Service Interface
A Party as
an e-Service
Provider
eService
Collaboration-34
Discussion of typical IS design
problems

General measures to handle contract breaches or exception
involves




Ambiguity and impreciseness of natural languages




reference to other laws, regulations, standard trade practices
parties involved should discuss and clarify the matter
amend existing or forthcoming contracts accordingly
Autonomous nature of individual organizations




domain specific knowledge
explicitly specified in other contract clauses
implicitly regulated by laws and standards
Required events might not be monitorable
Cooperation and trust - improves the transparency of operations
(CRM!)
Add explicit clauses in the contract to demand these events
Lack of e-services standards
eService
Collaboration-35
Outlook

Globalization and service-oriented economy





M-commerce
Cloud computing
Web 3.0 and semantics
Integration of various networks


Fierce competition
data, phone, and broadcasting networks
New business environment


New customer requirements
New opportunities and threats => innovation
COMP7880-sum-36