COMP7880: E-Business Strategies
Exploring new market spaces
Dickson K.W. Chiu
PhD, SMIEEE, SMACM, Life MHKCS
Jelassi & Enders: Chapter 7
1
Our Roadmap
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-EN-2
Value curve provides insights into
new market spaces
High
Performance
Value curve of
traditional
bookstores
Value curve of
Amazon.com
Price
Speed
Convenience Selection
range
Dimensions of benefit
Face-to-face
interaction
Source: Adapted from C. Kim and R. Mauborgne, (1999).
COMP7880-EN-3
The first step leading to value
innovations is the ‘visual awakening’

Assignment for team exercise
Activities
Objective
Draw the value
curve of a
specific offering
and compare it
with
competitors
• Pick a specific company offering
• Each team member writes down what
he/she considers to be the key
product/service elements
• As a group discuss and reach consensus
on the key elements
• Rate the offering's level on each key
element against the main competitors
• Do you see other competitors with
radically different value curves?
COMP7880-EN-4
Display the current situation of the
offering selected

Value curve of . . . . . . . . . . .
Very high
High
Offering
level
Average
Low
Very low
Non
existent
Key
elements
COMP7880-EN-5
Value innovations focus on
customers rather than competitors
Characteristics of conventional and value innovation logic
Conventional logic
Value innovation logic
Assumption
An industry's value curves
follow one basic shape.
New value curves can be shaped
that solve traditional trade-offs.
Strategic
focus
Build a competitive advantage
and beat the competition.
Pursue a quantum leap in customer
value. Competition is no benchmark.
Customers
Retain and expand customer
base through segmentation and
customization. Focus on the
differences.
Target the mass of buyers. Let
some existing customers willingly
go. Focus on key commonalities
in what customers value.
Resources
Utilize existing assets and
capabilities.
Ask what we would do if we were
starting anew?
Offerings
Offer the products and services
of your industry.
Offer the total customer solution
exceeding industry boundaries.
COMP7880-EN-6
The second step leading to value
innovations is the ‘visual exploration’

Assignment for team exercise
Activities
• Adopt the perspective of a new industry entrant and
reconsider the existing value curves
Objective
Create a
new value
curve for a
specific
offering
• Use one or two of the paths to experiment with the
creations of a new value curve
– Industry: Ask which elements of substitute industries are
un/important to target buyers?
– Strategic groups: Ask which key elements of the offer
compel buyers to buy up or buy down?
– Buyers: Ask who are the decision makers and how would
changing buyer focus affect the key elements?
– Scope: Ask how is the offer currently used and what
activities/services might be valuably incorporated?
– Appeal: Ask how we can change the polarity of appeal?
– Time: Ask what trends are impacting our industry and
how do the key elements match
• Plot a new value curve. Indicate which key elements are
eliminated, reduced, raised or created
COMP7880-EN-7
Display possible changes to the
existing value curves

Value curve of . . . . . . . . . . .
Very high
Offering
level
High
Average
Low
Very low
Non
existent
Key
elements
COMP7880-EN-8
Six paths framework: creating value
innovations in e-business
6
1
Looking
across substitutive
industries
Looking
across time/
trends
Factors to be
reduced?
2
5
Looking
across functional Factors
to be
or emotional appeal eliminated?
4
Looking
across complementary offerings
Factors
to be
created?
Factors to be
raised?
Looking
across strategic
groups
3
Looking
across the chain
of buyers
Source: Based on C. Kim and R. Mauborgne (1999), pp. 83–93.
COMP7880-EN-9
Pinpointing possibilities for new value
creation
Does what we do really
create consumer
benefit? If not, which
components or features
of our product or 1
service should we
Eliminate
eliminate?
4
Where can we reduce
our range of offerings?
What costs us a lot of
money but does not
create benefit?
2
Reduce
3
Create
What can we do that
has not been done so
far?
Source: See also W. C. Kim and R. Mauborgne (1997), pp. 103–112, and (1999), pp. 83–93.
Raise
Where should we raise the
standard of products or
services? Where can we
increase benefit by
expanding our existing
offering?
COMP7880-EN-10
Value innovation shifts from head-to-head
competition to creating new market
Six path framework to create value innovations
Head-to-head competition
Creating new market space
Focuses on rivals in its industry Looks across substitute industries
across strategic groups
Strategic
Focuses on competitive posi- Looks
within its industry
group
tion within strategic group
Buyer group Focuses on better serving the Redefines the buyer group
own buyer group
Product scope Focuses on maximising value Looks across complementary
offerings beyond the bounds
of the industry's products/
of its industry
services
Rethinks the functional/emoAppeal
Focuses on improving the
tional orientation
given appeal
Time/trends Focuses on adapting to trends Adopts the results of future
trends today
as they occur
Industry
COMP7880-EN-11
Finding the right timing for market
entry in e-business is critical
Early-mover advantages
Learning effects
Brand and reputation
Switching costs
Early-mover disadvantages
Market uncertainty
Technological uncertainty
Free-rider effects
Network effects
COMP7880-EN-12
Entrepreneurship process

Entrepreneurship and creativity is a process!






Identify an Opportunity
Develop a Concept
Determine the Required Resources
Acquire the Necessary Resources
Implement and Manage
Harvest the Venture
The Environment
The Organizational
Context
Entrepreneurial
Process
The Concept
The Entrepreneur
The Resources
Source: Morris et al. Entrepreneurship & Innovation
13
Entrepreneurship –
How to find opportunities
Types
Methods
Sources
Detractors
Perennial

Deliberate
search vs.
Discovery


The rules change
Demographics
change


No need present
Window is not
yet open
Occasional

Market pull vs.
Resource or
capacity push

Underserved
markets
Social trends


Strong loyalties
High switching
costs

Multiple
Causes

New customers to
the market

Satisfied
customers
Multiple Effects



Increase in usage
rates
Shortages
Easy for others
to enter with
alternatives
Intense
competition

New knowledge


Customers hard
to reach
Source: Morris et al. Entrepreneurship & Innovation
14
Entrepreneurship:
Types of Innovations







New to the world products or services
New to the market products or services
New product or service line that at least one
competitor is offering
Addition to existing products or service lines
Product/service improvement, revision, including
addition of new features or options
New application of existing products or services,
including application to a new market segment
Repositioning of an existing product or service
Source: Morris et al. Entrepreneurship & Innovation
15
Entrepreneurship - Entry Wedges
Other Entry Wedges
New Product or
Service
Exploiting Parallel Momentum
 Geographic Transfer
 Supply Shortages
 Tapping Utilized Resources
Customer Sponsorship
 Customer Contract
 Becoming a 2nd Source
Parent Co. Sponsorship
 Joint Venture
 Licensing
 Market Relinquishment
 Selloff Division
Governmental Sponsorship
 Favored Purchasing
 Rule Changes
Parallel
Competition
Franchising
Acquisition
X
X
X
X
X
X
X
X
X
X
X
Source: Morris et al. Entrepreneurship & Innovation
16