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Chapter 13 EC Strategy, Globalization, and SME S.

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1 Chapter 13 EC Strategy, Globalization, and SME S

2 Learning Objectives 1.Understand the essentials of online business competition and strategy and how the Internet and EC influence Porter’s Five Forces model. 2.Describe the performance and strategy cycle. 3.Describe the strategy initiation phase. 4.Understand the activities of strategy formulation. 5.Understand the strategy implementation phase.

3 Learning Objectives 6.Describe strategy assessment, including the role of metrics. 7.Describe performance improvements and innovations in e-commerce. 8.Evaluate the issues involved in global EC. 9.Describe how small and medium-sized businesses can use EC.

4 Organizational Strategy: Concepts and Overview *Strategy Strategy in the Web Environment Porter’s Five Forces Model and Strategies as Influenced by the Internet and EC 1.Threat of entry of new competitors 2.Bargaining power of suppliers 3.Bargaining power of customers or buyers 4.Threat of substitute products or services 5.Rivalry among existing firms in the industry o Strategies for Gaining Competitive Advantage

5 Porter’s Five Forces Model

6 Organizational Strategy: Concepts and Overview The Impact of the Internet Strategic Planning for IT and EC

7 The Strategy and Performance Cycle and Tools Strategy and Performance Cycle and Tools *Strategy Initiation—Goals o Improved performance o Gain of competitive advantage o Increased sales and revenue o Improved customer and partner service and relationships o Generation of new business models and facilitating innovation

8 The Strategy-Performance Cycle

9 The Strategy and Performance Cycle and Tools *Strategy Formulation o Specific activities and outcomes from this phase include: Business opportunities Cost–benefit analysis Risk analysis, assessment, and management Business plan *Strategy Implementation o The major specific activities and outcomes from this phase include: Project planning Resource allocation Project management

10 The Strategy and Performance Cycle and Tools *Strategy Assessment Performance Improvement and Innovations Major Tools for Strategic Planning

11 E-Commerce Strategy Initiation Representative Issues in E-Strategy Initiation in E-commerce o First-Mover Advantage o Managing Channel Conflict and Disintermediation *Disintermediation o Price Conflict and Its Management o Separating Online and Offline Operations Brand Independence Strategy in the Web 2.0 Environment and in Social Networking

12 E-Commerce Strategy Formulation Selecting E-Commerce Opportunities Determining an Appropriate EC Application Portfolio Mix o The BCG Model and an Internet Portfolio Map o The Viability-Fit Model Risk Analysis in Strategy Formulation o *E-Commerce risk Collaborative Efforts in Strategy Formulation

13 The Internet Portfolio Map Sources: Based on Tjan (2001), Sones (2001); and the authors’ experiences

14 E-Commerce Strategy Formulation Security Issues to Consider During Strategy Formulation Other Issues in E-Commerce Strategy Formulation o Managing Conflict Between the Offline and Online Businesses o Pricing Strategy *Cost-plus o Multichannel Strategy o Acquisitions, Partnerships, Joint Venture, and Multi EC Model Strategy

15 E-Commerce Strategy Implementation E-Commerce Strategy Implementation Process o Find a Champion *Project champion o Start with a Pilot Project o Allocate Resources o Manage the Project E-Commerce Strategy Implementation Issues o Build, Buy, or Rent EC Elements o Outsource: What? When? To Whom? *Outsourcing Software-as-a-Service

16 E-Commerce Strategy Implementation Redesigning Business Processes: BPR and BPM o *Business process reengineering (BPR) o *Business process management (BPM) o Change Management

17 E-Commerce Performance Assessment The Objectives of Assessment o Measure the extent to which the EC strategy and projects are delivering what they are supposed to deliver. o Determine if the EC strategy and projects are still viable in the current changing business environment. o Reassess the initial strategy in order to learn from mistakes and improve future planning. o Identify failing or lagging projects as soon as possible, and determine why they failed or lagged to avoid the same problems in the future.

18 E-Commerce Performance Assessment The Performance Assessment Process 1.Set up performance metrics. 2.Monitor the performance of the business. 3.Compare the actual performance to the metrics. 4.Conduct an analysis using analytics, including Web analytics. 5.Combine the analysis with the methodology of the Balanced Scorecard. 6.Present the results to management in the form of reports, tables and dashboards.

19 The Performance Assessment Process

20 E-Commerce Performance Assessment Establish Metrics o *Metric o Measurements in Performance Metrics *Key performance indicator (KPI) Intangible variables o E-Commerce Metrics in Action o Performance Metrics Monitoring Performance o Monitoring the Social Media Field Social Media Monitoring Tools o *The Balanced Scorecard (BSC)

21 E-Commerce Performance Assessment Analyzing Performance Data Defining EC Analytics o Major Types of Analysis Web Analytics and Its Major Tools o * Web analytics o Social Media Activities o *Sentiment Analysis (opinion mining)

22 Performance Improvement and Innovation An Overview of Performance Improvement Dashboards in E-Commerce o What Is a Dashboard? *Information dashboard Innovation for Performance Improvement

23 Performance Improvement and Innovation Innovative Strategies: Some Illustrative Examples o Target Corporation o Best Buy o Travelzoo Inc. o Facebook o Apple o o Google+ o IBM

24 A Strategy for Global E-Commerce Benefits and Extent of Global Operations o Globalization and Social Networking Barriers to Global E-Commerce o Cultural Differences o Language Translation Machine Translation o Legal Issues o Geographic Issues and Localization Web Localization Payments in Global EC Trades o Economic and Financial Issues E-Commerce in Developing Countries

25 A Strategy for Global E-Commerce Breaking Down the Barriers to Global E- Commerce o Be strategic o Know your audience o Localize o Think globally, act consistently o Value the human touch o Clarify, document, explain o Offer services that reduce trade barriers

26 E-Commerce Strategy for Small and Medium-sized Enterprises o If Judy Can- You Can Too!: The Story of Blissful Tones Webstore Globalization and SMES Resources to Support SME ACTIVITIES IN EC SMES and Social Networks

27 Screen Shot Of Blissfultones.Com

28 Managerial Issues 1.What is the strategic value of EC to the organization? 2.How do you relate the EC activities to business objectives and metrics? 3.Should the EC activities in a brick-and-click company be organized as a separate entity? 4.How should the e-business scope evolve? 5.What are the benefits and risks of EC? 6.Why do we need an EC planning process? 7.How can EC go global? 8.How do you manage the EC project?

29 Summary 1.Strategy concepts and competitiveness. 2.The strategy-performance cycle and strategy tools. 3.E-strategy initiation. 4.Strategy formulation. 5.E-strategy implementation. 6.Strategy assessment. 7.Performance improvement and innovation. 8.Issues in global EC. 9.Small and medium-sized businesses and EC.

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