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Chapter 4: Business strategy
update
Business
Environment
Business
Strategy
Technology
Evaluation
Business
Capability
Strategy
Formulation
Business
Strategy
revise
e-Commerce
Strategy
e-Commerce
Plan
improve
Business
Implementation
Technical
Implementation
Evaluation
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Corporate strategy
‘Corporate strategy is the pattern of major objectives,
purpose or goals and essential policies or plans for
achieving those goals, stated in such a way as to
define what business the company is in or is to be in
and the kind of company it is or is to be.’
Andrews (1971)
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Strategy formulation
 Four Stages of Strategy Formulation:
 Consideration of environmental changes that
bring about new opportunities and pose new
threats.
 Assessment of the internal strengths and
weaknesses of the institution and in particular its
ability to respond to those opportunities and
threats.
 A decision-making process influenced by the
values, preferences and power of interested
parties.
 A strategy generating process concerned with
generating options and evaluating them.
Needle (1994)
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Alternative strategies
 Strategy formulation is both rational and intuitive –
organisations faced with the same environmental
circumstances and with similar business capabilities may well
develop entirely opposite strategies.
 Car assemblers may go for:
 Volume production that competes on price, or
 Higher margins in quality and niche markets.
 Retailers may choose to:
 Switch strategy to online selling.
 Develop their agent network.
electronic
 Enhance traditional retail outlets.
commerce
 Whatever the selected strategy:

strategy
 Strategy formation is an ongoing process.
technologies
 The strategy needs to become part of the fabric of the
and
organisation.
applications
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Strategic implications of IT
 IT – initially used for administrative automation.
 ICT (information and communications technology)
used for:
 Intra-organisational systems
 Inter-organisational systems
 Public access networks (Internet)
 Mobile data communications
 The use of ICTs can have strategic implications for
small and large organisations.
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e-Commerce strategy inputs
 Traditionally an IT Strategy would be subservient to
the Business Strategy.
 For e-Commerce the IT Strategy becomes a central
component (or the determinant factor) in Business
Strategy.
 Inputs to an e-Commerce Business Strategy are:
 Technology
 Business Environment
 Business Capability
 Existing Business Strategy
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Technology
e-Commerce technologies:
 EDI:
 Streamline supply logistics.
 Facilitate decreases in trade cycle times.
 Electronic Markets:
 Redefine the operation of a market sector.
 Internet e-Commerce:
 New direct sales opportunities
 Novel business to business and business to
consumer applications
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Technology
The organisation
Source of business value
Improve it
product promotion
new direct sales channel
direct savings
time to market
customer service
brand image
Transform it
technological and organisational
learning
customer relations
Redefine it
new product capabilities
new business models
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Business environment
All businesses operate within an external environment.
Environmental factors that interact with business include:
 The Economy:
 The State:
 Sets the regulatory framework
(For e-Commerce, with a global spread, the effect of
state regulation can be ambiguous).
 Technology
(the topic of the previous section)
 The Labour Market:
 e-Commerce - need special skills.
 e-Commerce can result in downsizing.
 Culture:
 e-Commerce varies across countries.
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Business capability
 Gap analysis:
‘A knowledge of the resources and an organisation
possesses, and what can be done with them, is a
prerequisite for future plans and establishes
whether a gap exists between what management
would like to do and what they can do.’
(Needle, 1994)
 e-Commerce needs new skills and, in all probability,
alters the ways in which business is done.
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Existing business strategy
 Very possibly the organisation already has a
business strategy and this can and should be part
of the evaluation of the e-Commerce strategy.
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Strategy formulation
 The Strategy Formulation is based on the inputs:
 Technology
 Business Environment
 Business Capability
 Existing Business Strategy
 Strategy Formulation then involves discussion and negotiation
– stages can include:
 Identifying Options
 Evaluating Options
 Selecting Strategy
electronic
commerce

strategy
technologies  The outputs are:
and
 The New Business Strategy
applications
 An e-Commerce Strategy
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electronic
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applications
Business
Environment
Business
Strategy
Technology
Evaluation
update
Business
Capability
Strategy
Formulation
e-Commerce
Strategy
Business
Strategy
revise
e-Commerce
Plan
Business
Implementation
Technical
Implementation
improve
Evaluation
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e-Commerce implementation
 Technical implementation:
 Ease of Use
 Functionality
 Back Office Systems
 Business Implementation:
 Business Infrastructure
 Marketing
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e-Commerce evaluation
 Evaluate:
 Feedback from Users
 Feedback from those who gave up?!
 Loopback:
 Improve it
 Revise it
 Update it
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Chapter 4 – Exercise 1
 Suggest three advantages and three disadvantages
for an organisation in devising and implementing a
corporate strategy.
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Chapter 4 – Exercise 2
Using the corporate strategy formulation process outlined in
Section 4.1:
 List environmental changes that bring about new opportunities
or pose new threats to the college or university at which you
are studying;
 Assess the strengths and weaknesses of the institution and its
ability to respond to the environmental changes;
 Suggest some strategic initiatives that your college or
university might take to improve its position in the education
market place.
(If appropriate an alternative trade sector can be selected as
the subject of the study. Possible organisations include the
student union, the local bus company or any other
organisation with which the student has familiarity).
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Chapter 4 – Exercise 3
 Moving onto e-Commerce, review Bloch’s ten
points of business value and suggest how each
might apply to the promotion of your college or
university.
(If appropriate an alternative trade sector can be
selected as the subject of the study. Possible
organisations include the student union, the local
bus company or any other organisation with which
the student has familiarity).
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Chapter 4 – Exercise 4
 Using the material from the proceeding exercises,
suggest how the college or university might further
promote itself using the Internet. (Note that the
institution probably already has a web page and the
requirement is for imaginative new initiatives over
and above this provision.)
(If appropriate an alternative trade sector can be
selected as the subject of the study. Possible
organisations include the student union, the local
bus company or any other organisation with which
the student has familiarity).
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