E-business strategy
Strategic analysis
Techniques'
•  SLEPT'(Macro.environment)'
•  Resource'analysis'
•  Por;olio'analysis'
•  SWOT'
•  Demand/CompeCtor'(Porter’s'5'forces'model)'
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Strategic analysis
Strategic objectives
Strategy definition
Strategy implementation
Strategic objectives
E.business'specific'techniques'
•  Stage'models'
•  Specific'e.business'opportuniCes'and'threats'
E-business strategy
Vision
•  Complement or Replace
Objectives
•  SMART
•  Online revenue contribution
•  Customer value target
E-business specific techniques
•  Vision about capability to change or to reinvent
•  Online revenue contribution
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Strategic evaluation/analysis
Strategic objectives
Strategy definition
Strategy implementation
Strategy definition
Strategy definition
•  Strategy definition is
•  formulation,
•  review and
•  selection
of strategies to
•  achieve strategic objectives
OpCons'
•  OpCon'generaCon'
•  OpCon'evaluaCon'
•  OpCon'selecCon'
E.business'strategic'decision'
•  1.'Channel'prioriCes'
•  2.'Market'and'product'development'
•  3.'PosiConing'and'differenCaCon'strategies'
•  4.'Business'and'revenue'models'
•  5.'Marketplace'restructuring'
•  6.'Supply.chain'management'capabiliCes'
•  7.'Internal'knowledge'management'capabiliCes'
•  8.'OrganizaConal'resourcing'and'capabiliCes'
•  Preceded by
•  Generating options
•  Evaluation of options
•  Selection of options
Matrix Model for options (Tjan, 2001)
Viability
0"Points"
100"points"
Market'value'potenCal'
<'10'M€'
>'1000'M€'
Time'to'posiCve'cash'flow'
>'5'years'
<'1'year'
Personnel'requirement'
>'20'people'
<'5'people'
Funding'requirement'
>'35'M€'
<'3'M€'
Fit"
Alignment'with'core'capabiliCes'
Alignment'with'other'company'iniCaCves'
Fit'with'organizaConal’s'structure'
Fit'with'organizaConal’s'culture/values'
Ease'of'technical'implementaCon'
Low"
Medium"
High"
Strategy alternatives matrix
Strategy definition decisions
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Decision 1: Channel priorities
Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
“Getting the right mix of bricks and clicks”
Gulati and Garino (2000)
Channel priorities
•  Internet pureplay:
Company trading online with limited or no physical
presence, e.g. as retail units
•  Particularly start-ups
•  Impractical for many businesses
•  Right channeling:
•  The right person
•  At the right time
•  Using the right communication channel
•  With a relevant offer, product or message.
Strategy definition decisions
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Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Channel priorities
•  Right-channeling applications:
Example
Application and tactics
Account-managed relationships
Face-to-face and phone with large,
high-sales-volume clients
Sell to and serve SME online
Internet sales and extranet service
Encourage customer to online
channels
???
Provide offline conversion during
sales
Phone callback or live chat from
within web sales
Migrate customers to web selfservice
Self-manage accounts for lowercost-to-serve
Selective service levels for
different customer types
Integrated CRM systems
Development strategies
•  Question:
•  What is sold?
•  Who is it sold to?
•  Market and Product development matrix:
Strategy definition decisions
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Positioning and differentiation
Porter (1985, 2001):
Profitability is determined by:
1.  Industry structure
2.  Sustainable competitive advantage
Cost and price advantage achieved through:
1.  Operational effectiveness
2.  Strategic positioning
Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Positioning and differentiation
Operational effectiveness (OE) =
•  Performing similar activities better than rivals
perform them.
•  Internet is (most) powerful tool for enhancing OE
Productivity frontier =
•  Maximum value a company can deliver at a given
cost, given best available technology, skills,
management techniques…
Competition leads to:
•  Absolute improvement in OE (for all)
•  Relative improvement in OE to no one
Positioning and differentiation
Positioning and differentiation (2)
Porter’s Generic strategies
“Competitive strategy is about being different”
Strategic positioning =
Attempts to achieve sustainable competitive
advantage by preserving distinction:
•  Perform different activities from competitors, or
•  Perform similar activities in different ways.
Origins of strategic positioning
Porter (1996):
1.  Variety-based positioning:
based on choice of product or service
2.  Needs-based positioning:
based on choice of customer/market segment
3.  Access-based positioning:
based on segmenting customers who are
accessible in different ways
Scope:
•  Any positioning can be broad or narrow
(based on 3 dimensions)
•  Level of differentiation
•  Relative product cost
•  Scope of target market
•  Three most viable bases for positioning:
•  Cost leadership
•  Differentiation
•  Focus
Examples
•  Low-cost airline carrier (Ryanair, Easyjet)
•  Variety-based, narrow focus
•  Regular airline
•  Variety-based, broad focus
•  IKEA
•  Needs-based, broad focus
•  Apple
•  Variety-based, broad focus
•  Bang & Olufsen
•  Variety-based, narrow focus
Trade-off and Fit
Alternatives: value disciplines
Trade-off:
•  When you choose a particular position, you choose
not to use other approaches
•  These trade-offs are essential and make imitation
difficult
Fit:
•  Production, marketing, personnel, etc. should all be
consistent:
•  When all activities work together as a system,
imitation is difficult.
Customer value
Treacy & Wiersema:
1.  Operational excellence:
Best total cost
2.  Product leadership:
Best product
3.  Customer intimacy:
Best total service
In practice:
1.  Each dimension should be good
2.  Choose excellence in one dimension
Strategy definition decisions
•  Position relative to competitors:
•  Product quality
•  Service quality
•  Price
•  Fulfillment time
•  Deise et al. (2000)
Customer value (brand perception) =
Product quality × Service quality
Price × Fulfilment time
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Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Business and revenue models
•  Recall: Business model:
A summary of how a company will generate
revenue, identifying its product offering, valueadded services, revenue sources and target
customer
•  Revenue model:
Describe methods of generating income
•  Observations from practice:
•  Change and flexibility ≠ Losing focus on core
business
•  Innovation often through acquisition
Marketplace restructuring
•  Review options for:
•  Disintermediation
•  Re-intermediation
•  Countermediation
Strategy definition decisions
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Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Strategy definition decisions
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Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Supply-chain management capabilities
•  Questions:
•  Integrate more closely with suppliers?
•  Which materials and interactions should we
support through e-procurement?
•  Can we participate in online marketplaces to
reduce costs?
Knowledge
Every day knowledge essential to your business
walks out of your door, and much of it never comes
back.
Saunders (2000)
Knowledge:
•  Combination of data and information,
•  With added expert opinion, skills and experience
•  Explicit / Tacit
•  Individual and/or collective
Strategy definition decisions
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Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Knowledge management
Knowledge management:
•  Techniques and tools for disseminating knowledge
•  Main activities:
•  Identify
•  Create
•  Store
•  Share
•  Use
Technologies for KM
Classes of KM applications (Binney, 2000):
1.  Transactional:
Helpdesk, customer service apps
2.  Analytical:
Data mining/warehousing for CRM apps
3.  Asset management:
Document and content management
4.  Process support:
Web 2.0 for KM
Approaches:
•  Content management systems
•  Internal blogs
•  Micro-blogging: www.yammer.com
•  Social networks: www.cyn.in, www.ning.com
•  Wiki
Total quality management, benchmarking, BPR
5.  Developmental:
Enhancing skills / competencies, training, e-learning
6.  Innovation and creation:
Communities, collaboration, virtual teamwork
Strategy definition decisions
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Channel priorities
Market and product development
Positioning and differentiation strategies
Business and revenue models
Marketplace restructuring
Supply-chain management capabilities
Internal knowledge management capabilities
Organizational resourcing and capabilities
Organizational resourcing and capabilities
•  Decide how organization needs to change to
achieve the priorities set for e-business.
•  Gulati & Garino (2000):
•  In-house division (integration)
•  Joint venture (mixed)
•  Strategic partnership (mixed)
•  Spin-off (separation)
•  QUESTION: what are the advantages of
•  Integration
•  Spin-off?
E-business strategy
Strategy implementation
ImplementaCon'
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Strategic evaluation/analysis
Strategic objectives
Strategy definition
Strategy implementation
•  Planning'
•  ExecuCon'
•  Control'
ImplementaCon'issues'
•  Supply'chain'management'strategies'(Chapters'6'and'7)'
•  E.markeCng'strategies'(Chapters'8'and'9)'
•  Planning,'scheduling'and'change'management'(Chapter'10)'
•  E.business'analysis'and'design'(Chapter'11)'
•  ImplementaCon,'maintenance'and'control'(Chapter'12)'
Success or failure
•  Failures due to: (Miller, 2003):
•  Overestimation of adoption
•  Unrealistic replacement expectations
•  Timing errors
•  Lack of creativity
•  Offering free services
•  Over-ambition
•  Classic mistakes:
•  Situation analysis
•  Objective setting
•  Strategy definition
•  Implementation
Outline
•  Intro
•  Strategic Analysis
•  Strategic Objectives
•  Strategy Definition
•  Strategy Implementation
•  Information systems strategy and e-business
strategy
IS strategy vs. e-business strategy
Strategic Information Systems matrix
•  Question: how does IS strategy supports change?
•  Business-alignment IS strategy:
•  Top-down
•  How can IS be used to directly support a defined ebusiness strategy?
•  Strategic IS matrix
•  Business-impacting IS strategy:
•  Bottom-up
•  New opportunities from deployment IS may impact
positively on business strategy?
•  Redesign business processes?
•  Value chain analysis
Strategic Information Systems
Three types of Information Systems:
1.  Financial information systems:
•  Mechanization and control of financial systems
•  Accounting, budgeting, HR,…
2.  Operational / Service information systems:
•  Control details and cost effectiveness of business
•  Ordering, inventory control, planning,…
3.  Strategic information systems:
•  Profound impact on profitability and competitive
advantage
•  Links/aligns business and computer strategies
Summary
•  Key characteristics of an e-business strategy model:
•  Based on assessment of internal and external
environment
•  Have clearly defined SMART objectives backed
up by vision
•  Have strategies, tactics and implementation that
select the best techniques to achieve these
strategies
•  Have monitoring and control that assess whether
the objectives are being achieved and a feedback
loop to ensure corrective action occurs.