EC Strategy and
Implementation
Sistem e-Business
(MG-652)
Jurusan Manajemen
Agenda
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Learning Objectives
Strategic Planning for EC
Electronic Commerce Strategy in Action
Competitive Intelligence on the Internet
Implementation steps and plans
Web Assessment
Managerial Issues
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Industry and Competitive Analysis
Strategy Formulation
Value Analysis Approach
Return on Investment and Risk Analysis
Strategic Planning
for eBusiness
Internet and
Competitive Intelligence
Competitive Intelligence
on the Internet
Push Technology and
Competitive Intelligence
eBusiness Scenarios
Competitive Strategies
Cooperative Strategies
Strategic Planning Framework
Project Strategy
Assessment
What Questions
a Strategic Plan
Should Answer
Conduct necessary
education and training
Collecting Information
Finalization
Considering the Strategic Value of eBusiness
Understand what customers and
partners expect from the web
Give a new role to Human Resources
Department
Measuring Results
eBusiness Strategy
and Implementation
Review current distribution and
supply chain models
Reevaluate the nature of product and
services
Need for Assessment
Steps to successfull
eBusiness Programs
Implementing
eBusiness
Strategy
Managerial
Issues
Pilot Projects
Pilot Project
eBusiness Leadership
Track new competitors and market share
Participate in the creation and
development of virtual marketplaces
Considering the Risks
Integration
Extend current systems to outside
Develop a web-centric marketting strategy
Conducting Strategic Planning
eBusiness Opprtunities and Applications
Implementation
Creating Web Team
Evaluating Outsourcing
Web Content Design
Instill eBusiness management style
Security and Control
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Learning Objectives
• Describe the strategy planning process for EC.
• Understand the process of formulating EC
strategies.
• Describe the role of CSF and justification of EC.
• Explain competitive intelligence on the Internet
and in EC.
• Explain the steps and issues involved in EC
implementation.
• Understand how to reassess EC projects.
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Strategic Planning for EC
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Why does a company need strategic planning for EC and
what are the available options? A company may decide:
1. Not to go for EC.
2. To do only passive advertising.
3. To open online stores in addition to existing stores, typically
called e-tailing.
4. To establish a separate online division within the company.
5. To dissolve regular business and go for cyber-business only.
The choice depends not only on the nature of the business
company conducts but also on the environment the company
is operating in and on the internal resources available. Its
strategic plan includes a detailed analysis that supports a
choice of one of the five alternatives just mentioned.
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For example:
• IBM created an independent EC division.
• It introduced EC as a corporate culture.
• IBM leveraged its existing strengths.
• IBM tied EC with the reengineering of its process.
• The company started seven different EC initiatives.
• IBM decided to be an EC leader.
• It used return on investment (ROI) as a criteria for
selecting EC projects.
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Industry and
Competitive Analysis
Strategy Formulation
Implementation
Performance
Assessment, Strategy
Reassessment
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The Strategic
Planning Cycle
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INDUSTRY AND
COMPETITIVE ANALYSIS
• Industry and competitive analysis for EC entails monitoring,
evaluating, and disseminating information from the external
and internal environments with respect to launching an EC
project.
• The goal is to identify the critical success factors that will
determine the success of the EC project. Æ SWOT
analysis.
• SWOT: strengths, weaknesses, opportunities, and threats.
• The external environment consists of opportunities and
threats that are outside the organization and are not
typically within the short-run control of top management.
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The elements of SWOT are the following:
• Opportunities (O) : the external current and
future opportunities available for the company
are examined.
• Threats (T) : the external threats facing the
company now and in the future are analyzed.
• Strengths (S) : the specific areas of current and
future strengths for the company are described.
• Weaknesses (W) : the specific areas of current
and future weaknesses for the company are
stated.
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Strengths (S)
Weaknesses (W)
Opportunities (O)
SO Strategies
Generate strategies here
that use strengths to take
advantage
of
opportunities
WO Strategies
Generate strategies here that
take
advantage
of
opportunities by overcoming
weaknesses
Threats (T)
ST Strategies
Generate strategies here
that use strengths to avoid
threats
WT Strategies
Generate strategies here that
minimize weaknesses and
avoid threats
Internal Factors
External Factors
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STRATEGY
FORMULATION
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Based upon the results of the SWOT analysis, an EC strategy then
needs to be developed.
Strategy Formulation is the development of the long-range and
strategic plans for the effective management of environmental
opportunities and threats, in light of corporate strengths and
weaknesses.
It includes examining or redefining the corporate or project
mission by specifying achievable objectives, developing strategies,
and setting implementation guidelines for EC.
It should be noted that “going EC” can be done in many ways.
An EC initiative may include such EC projects as creating a
storefront, extranet, or an e-mall.
Strategic formulation is relevant both for EC initiative in general
and for individual EC projects.
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An organization’s mission states the purpose for the
organization’s existence.Æ What the company is providing
through EC.
Based on its EC mission, a company will formulate the objectives
of each EC project.
An EC objective is the measurable goal that the company wants
to achieve with EC.
A business should think about what it intends to accomplish by
establishing a Web site. There are primarily three reasons:
marketing, customer support, and sales. Æ Determining the
purpose of the site provides the framework for a company’s EC
strategy.
A company may decide to be fully involved in EC for its entire
line of business.
In Strategy Formulation, we need to provide answers to
questions such as: Does your business have a product that is a
good candidate for EC? There are certain products and services
that lend themselves more readily to EC than others.
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A commodity is a product that the buyer knows, such as books,
CDs, stock purchasing, and travel tickets.
If your particular product can be shipped easily or transmitted
electronically, it targets knowledgeable buyers, and its price falls
within a certain range, then it is a good candidate for EC.
In addition to redefining the market for existing products and
services, EC also provides the opportunity for entirely new
products and services. Examples: include network supply and
support services, directory services, contract services, escrow and
trust services, market makers, and many kinds of online
information services.
Strategy formulation could include several other topics and as a
result be too lengthy. To help focusing on the essentials, one can
use a methodology such as that of the critical success factors
(CSF).
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CRITICAL SUCCESS
FACTORS (CSF)
• CSF are the indispensable business, technology, and human
factors that help to achieve the desired level of
organizational goals.
• CSF are highly dependent on the company’s situation, it is
often helpful to start considering business environments
and benefits of EC, then analyzing any risks involved in the
EC project.
1. How can I use the information I have about individual
customers to make it easier for them to do business with me?
2. How much does it cost me to provide services that customers
could get by themselves over the Internet?
3. What help can I give customers by using the experience of
other customers or the expertise of my employees?
4. Will I be at a significant disadvantage if my competitors
provide these capabilities before I do?
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The major CSF for EC initiatives are summarized below:
• Specific products or services traded
• Top management support
• Project team reflecting various functional areas
• Technical infrastructure
• Customer acceptance
• User-friendly Web interface
• Integration with the corporate legacy systems
• Security and control of the EC system
• Competition and market situation
• Pilot project and corporate knowledge
• Promotion and internal communication
• Cost of the EC project
• Level of trust between buyers and sellers
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A VALUE ANALYSIS
APPROACH
• One approach that can be used to assess the desirability of
EC is to employ a formal value chain analysis (Porter 1985).
• A value chain is a series of activities a company performs to
achieve its goal(s) at various stages of the production
process, from resources’ acquisition to product delivery. Æ
Added value of these activities to profit and enhances the
asset value as well as the competitive position of the
company in the market.
• See Value Analysis Questions, page 311.
• See Figure 9.3 Relationship Marketing Model, page 312. Æ
Customer Acquisition, Customer Retention, Customer
Extension, Customer Selection.
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Relationship Marketing
Model
what criteria determines
who will be our most
profitable customers ?
Customer
Selection
How can we increase the
loyalty and the profitability
of this customer ?
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Customer
Aquisition
R elationship
M arketing
Customer
Extension
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How can we acquire this
customer in the most
efficient and effective way
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Customer
retention
How can we keep this
customer for as long as
possible ?
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RETURN ON
INVESTMENT AND RISK
ANALYSIS
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The rate of ROI for an EC project is a ratio of the cost of
resources required to the benefits generated by the EC project.
It includes both quantifiable and non-quantifiable items.
The cost of resources, such as H/W, S/W, and human resources,
for an EC project is relatively easy to quantify.
The returns (benefits) have been difficult to measure. (as seen in
many other information technology projects).
Primary intangible benefits that the company can draw from EC
include an effective marketing channel, increased sales, and
customer service.
The toughest part about calculating an extranet’s ROI is assessing
the extranet’s impact on business processes internally and across
organizational boundaries.
Once the strategic planning and the cost-benefit analysis are
completed, an EC project can be implemented.
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STRATEGIC PLANNING
FRAMEWORK: COMPETITIVE
vs COOPERATIVE STRATEGIES
• A competitive strategy assumes fighting against
all competitors for the purpose of survival and to
win. Æ See table 9.2 EC Scenario and Critical IT
and Business Events. (Frontal assault, Flanking
maneuver, Raise structural barriers, Lower the
inducement for attack).
• A cooperative strategy plans for working together
with specific competitors to gain advantage
against other competitors. (Joint Venture, ValueChain partnership, EC strategies in small
businesses).
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Electronic Commerce
Strategy in Action
• Review the strategic plan questions should answer page
317-318.
• The steps to successful EC programs:
1. Conduct necessary education and training.
2. Review current distribution and supply chain models.
3. Understand what your customers and partners expect
from the Web.
4. Reevaluate the nature of your products and services.
5. Give a new role to your human resources department.
6. Extend your current systems to the outside.
7. Track new competitors and market shares.
8. Develop a Web-Centric Marketing strategy.
9. Participate in the creation and development of virtual
marketplace.
10.Instill EC management style.
• Also see Seven-Step Model. Page 320.
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Competitive Intelligence
on the Internet
• Intelligent agents can help execute business
intelligence in the market more efficiently.
• Intelligence on the Web can be done in many
ways, such as environmental scanning, analyzing
messages of news groups, carefully reviewing
competitors’ Web pages and analyzing publicly
online documents.
• See Application Case 9.4. page 321.
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Implementation
steps and plans
• Creating a Web team representing various
functional areas and planning for detailed
technology tasks including Web hosting
and security and control are important
parts of an implementation plan. Æ See
table 9.4. Web Application Features.
• Other implementation issues are whether
or not to outsource. Æ See table 9.3.
Assigning Functional Expertise to
Subprojects.
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Web Assessment
• Feedback and corrective actions (if
needed) for EC strategies are critical
before launching a large project or
expanding a pilot one.
• See table 9.5. Web content design
considerations
• See table 9.6. Questions to evaluate an EC
project
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Web Content Design
Considerations
Service wanted
Manpower and electronic content the company can provide
Time to design your site
Time to create and program your site
Extra fees for software development
Fees for off-the-shelf application tools
Size of the site
Amount of traffic the site generates
Management and control of content
Training for web team
Outside consulting
System installation
Server Maintenance
Application programming
Place for web hosting
Security for financial transactions
Bandwith needs
System capacity planning
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Managerial Issues
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Considering the strategic value of EC.
Conducting strategic planning.
Considering the risks.
Integration.
Pilot projects.
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