1. دانشگاه گیلان 1 E-Commerce Strategy Part II Source: E-Commerce Formulation of Strategy, Robert T. Plant, Prentice Hall, 2000 پردیس بین الملل Mahmoud Moradi, Ph.D. Assistant Professor of Management Management Group University of Guilan m.moradi@guilan.ac.ir mahmoudmoradi@gmail.com

2. About author Dr. Plant is an associate professor at the School of Business Administration, University of Miami, Coral Gables, Florida. Ph.D. in Computer Science at The University of Liverpool, England. Dr. Plant is a Microsoft Certified Systems Engineer (MCSE) and an MCP + 1. He holds visiting teaching and research positions at Templeton College, Oxford University, England; Universidad Gabriela Mistral, Santiago, Chile; and Victoria University of Wellington, New Zealand. In addition, he has taught in executive MBA programs at IBM, Motorola, Pratt & Whitney, Office Depot, American Express, W. R. Grace, Siemens, and other Fortune 500 companies. Dr. Plant's consulting and research interests are in e-commerce, virtual organizations, and the role of information systems in strategic management.. EC Strategy - پردیس بین الملل دانشگاه گیلان 2

3. About book The main question is: "What will be the impact of the Internet on our business, our competitive strategy, and our information systems strategy?" Author interviewed senior executives at more than 40 major corporations in US and Europe to reveal diverse approaches to this question. 16 of which were top 10 in their industries as defined by Fortune. EC Strategy - پردیس بین الملل دانشگاه گیلان 3

4. Some Companies and case studies EC Strategy - پردیس بین الملل دانشگاه گیلان 4 NCompany 1IBMcomputer 2Motorolatelecommunications 3Sonyentertainment 4PricelineOnline retail 5BMWAutomobiles 6Charles SchwabFinance 7SchlumbergerOil 8GMAutomobiles 9LockheedDefense 10CitigroupBanks

5. Approaches toward main question Most companies have recognized that they need to create and execute an EC strategy. Blindly follow the strategy of stars such Amazon is Impossible Some companies steel feel that they can largely ignore the Internet and that they can offer a token website with a basic product offering. How quickly could you respond if your strongest competitor came out with a powerful EC strategy tomorrow? Other companies have recognized some of drivers in EC and have adopted some of them. This lack of balance between service, branding, technology, and marketing can be damaging. Some organizations are winning and creating adaptive, intelligent solutions EC Strategy - پردیس بین الملل دانشگاه گیلان 5

6. Postulate The challenge is to be aware of the rapid growth in converging technologies and to translate the potential of these technologies into business vision and dynamic competitive strategy. To be effective, an EC strategy has to be integrated with the strategic vision of the company as a whole. The approach to the creation of an effective EC strategy is not always clear. So in this regard the aim of book is double: EC Strategy - پردیس بین الملل دانشگاه گیلان 6

7. 1. To enable senior executive and managers to understand the competitive implications of EC within their arenas of corporate competition. And 2. Through the methodologies presented, to enable executives to take effective action in developing a strong, unique, and effective strategy for their own organizations. EC Strategy - پردیس بین الملل دانشگاه گیلان 7

8. Contents (chapters) 1. Formulating an Internet Strategy in a Networked World 2. Creating an Integrated E-commerce Strategy 3. Ownership Issues 4. E-strategy Leadership Through a Technology Focus 5. Developing a Market Focus: Sector Strategies in Segmenting Markets 6. Service Leadership – Adding Value to the Customer at Every Point of Contract EC Strategy - پردیس بین الملل دانشگاه گیلان 8

9.  7. E-branding – The Emergence of New Global Brands  8. Formulating an Internet Roll-out Strategy  9. Internet Strategy Effectiveness – A Scorecard Approach  10. Waves of the Future – Issues That Will Shape the Formulation of Strategy  11. Views from the edge – Conversations with Executives EC Strategy - پردیس بین الملل دانشگاه گیلان 9

10. Brief review of the chapters EC Strategy - پردیس بین الملل دانشگاه گیلان 10

11. Chapter 1: Formulating an Internet Strategy in a Networked World The dynamics of the EC marketspace and the three market positions that organizations and their executives find themselves. New organizations: born on the Net Existing organizations: move to the Net E-consortia: form a swarm to the Net The ultimate success of the strategy created and adopted by an organization depends heavily upon early identification of the specific issues and options available in each of these sectors when applied to the individual circumstances of the organization. EC Strategy - پردیس بین الملل دانشگاه گیلان 11

12. Chapter 2: Creating an Integrated E-commerce Strategy Seven dimensions of an EC strategy: The four positional characteristics brand, technology, service, and market The three bonding factors leadership, infrastructure, and organizational learning Determination of the interrelationships among these factors is key to the creation of a strong yet adaptable EC strategy. EC Strategy - پردیس بین الملل دانشگاه گیلان 12

13. The Seven Dimensions of an e-Commerce Strategy EC Strategy - پردیس بین الملل دانشگاه گیلان 13 Leadership Infrastructure Service Market Organizational Learning Organizational Learning Brand Technology

14. Chapter 3: Ownership Issues The key to successful business on the Internet is not the formulation of a conceptual strategy but the execution of that strategy. The key organizational issues that need to be effectively managed to successfully compete in the Internet marketspace, include: E-centric management structures Content ownership EC Strategy - پردیس بین الملل دانشگاه گیلان 14

15. Chapter 4: E-strategy Leadership Through a Technology Focus First positional factor = technology In this chapter technology issues are considered in relation to other key drivers - corporate positioning and structure. The chapter describes how these factors, when carefully molded together, combine to create the dynamism found in the world's great companies. The McKinsey Seven S Framework Strategy Skills Staff Style Structure Shared values Systems ( ERP, KM, Data warehousing ) EC Strategy - پردیس بین الملل دانشگاه گیلان 15

16. Chapter 5: Developing a Market Focus: Sector Strategies in Segmenting Markets Second positional factor = market This chapter considers the issues facing industry types and develops the issues relevant to major segments through case studies of leading organizations in EC strategy and deployment. Manufacturing: CA-Chemical Mixed service and goods: Sony Mixed service and goods (B2B): US Medical Systems Service organization: Charles Schwab EC Strategy - پردیس بین الملل دانشگاه گیلان 16

17. Chapter 6: Service Leadership Through the Internet Service Value Chain Third positional factor = service The ability to create a meaningful customer relationship at all points of contact is central to doing business on the Internet. This chapter considers the interaction of customer relationship management through three drivers Content format access Customer acquisition: pre purchase support Customer support: during purchase Customer fulfillment: purchase dispatch Customer continuance: post purchase support EC Strategy - پردیس بین الملل دانشگاه گیلان 17

18. Chapter 7: E-branding-the Emergence of New Global Brands Forth positional factor = brand For traditional organizations moving to the Net, their challenge is to leverage existing brands effectively and move forward in their new chosen marketspaces. This chapter discusses the four major positions that can be adopted: Brand creation Brand reinforcement Brand reposition Brand follower EC Strategy - پردیس بین الملل دانشگاه گیلان 18

19. Chapter 8: Formulating an Internet Rollout Strategy This chapter discusses the issues surrounding developmental choices available to executives. The major technical issues CIOs and technologists face. Developments options The internal development route The external development route Partnering models Hosting options Application design Network topology Server configuration EC Strategy - پردیس بین الملل دانشگاه گیلان 19

20. Chapter 9: Internet Strategy Effectiveness-A Scorecard Approach The aim of the chapter is to help executives answer two fundamental questions: What are the strengths and weaknesses of my strategy or proposed strategy? What will I get out of this technology investment? This chapter develops a set of frameworks that managers can work from in order to gain an understanding of the forces in strategy formulation pertaining to their own individual circumstances. The frameworks contain over 50 questions covering the seven dimensions of strategy formulation. It considers: The creation of a metrics program The Internet effectiveness scorecard The e-value map: an ownership/manager level analysis EC Strategy - پردیس بین الملل دانشگاه گیلان 20

21. Chapter 10: Waves of the Future This chapter discusses the six major areas in which change will originate as the environment of EC goes forward in time. The ability to stay ahead in all of these areas is vital to EC strategies, and the chapter highlights critical issues in each areas; 14 waves. The areas are: Technology changes Branding changes Market changes Service changes Government and political changes External relationship changes EC Strategy - پردیس بین الملل دانشگاه گیلان 21

22. Chapter 11: Views from the Edge This chapter contains five interviews from executives on the leading edge of strategy and vision. These interviews may help real-world managers cope with their mainstream environments and organizations more effectively. The interviews include: two dot-com start-ups a software company transitioning to the Net a multinational telecommunications company a power utility The interviewees: Born on the Net Move to the Net EC Strategy - پردیس بین الملل دانشگاه گیلان 22

23. Pause de Recréation! EC Strategy - پردیس بین الملل دانشگاه گیلان 23

24. Chapter 1 Formulating an Internet Strategy in a Networked World EC Strategy - پردیس بین الملل دانشگاه گیلان 24

25. 1.1 Introduction: e-Business Processes EC Strategy - پردیس بین الملل دانشگاه گیلان 25 WHY Customer Relationship Redesign Business Processes Applying Technology WHAT HOW

26. 26 1.2 Why EC Model is beneficial to your Business? The EC model is a basic model of competitive strategy, based on the principles of low costs, high volumes, and comprehensive service, combined with a product range unapproachable through traditional channels. E*Trade Amazon eBay EC Strategy - پردیس بین الملل دانشگاه گیلان

27. 27 1.3 Why New Models? We need some new models for how we go about exploring IT for competitive advantage, for IT infrastructure: how we create it and manage it for how we acquire, manage and deploy the skills that are needed to run that infrastructure Source: Louis Gerstner IBM executive, 1998 The aim of this book is to help e­commerce strategists create and formulate these models. EC Strategy - پردیس بین الملل دانشگاه گیلان

28. 28 1.4 Established, Online, and Consortium Organizations in the Marketspace Established organizations Total Market Online Organizations E-commerce Marketspace E-consortium EC Strategy - پردیس بین الملل دانشگاه گیلان Moving to the net Born on the net E-consortium

29. 1.5 leadership Position Pillars of success for Born on the net 1. Technology 2. Marketing 3. Service 4. Branding EC Strategy - پردیس بین الملل دانشگاه گیلان 29

30. 30 1.5.1. Technology  The technology goal must be understood for that organization within its industry and market.  An organization must determine it is going to be an advanced technology leader or follow a technology agenda that relies upon more stable systems (bleeding versus leading edge).  An organization must determine what is the necessary relationship between the company’s technology or product strategy and the operational aspects of that strategy.  The technology employed by an organization must service the customers’ needs and expectations from a technology perspective. Organizations must have clearly defined the answers to these questions and must work them into their business plan. EC Strategy - پردیس بین الملل دانشگاه گیلان

31. 31 1.5.2. Market  An organization must determine its target market and whether it is still realistically open to new entrants.  An organization must understand how the market is going to segment and grow over the near and longer term and know whether the organization will be able to move rapidly enough to meet those changing needs.  Being born on the Net requires that the organization understand the possible moves from majors established organizations and utilize its own dexterity to counter them EC Strategy - پردیس بین الملل دانشگاه گیلان

32. 32 1.5.3. Service  An organization must know its customers’ expectations regarding service level  The organization must understand what its value proposition is and how service facilitates or augments it  An organization must understand its own Internet service value chain, the components of which are: Understanding the relationship between attracting customers and service levels Understanding how an organization creates service value during a transaction for a customer. Understanding how service plays a role in the customer fulfillment process, where the purchase is dispatched. Understanding the role of customer service in retaining customers and maintaining site adhesion. EC Strategy - پردیس بین الملل دانشگاه گیلان

33. 33 1.5.4. Brand  An organization must understand whether it has the ability to create a strong brand  An organization must understand the basis of its brand. Is it: Technology leadership? Service provision? Market positioning? EC Strategy - پردیس بین الملل دانشگاه گیلان

34. 1.6 Leadership Position Pillars of success for Move to the net 1. Technology 2. Marketing 3. Service 4. Branding EC Strategy - پردیس بین الملل دانشگاه گیلان 34

35. 35 1.6.1. Technology  An organization must understand what technology implications are for that organization --Internet, enterprise resource planning, data Warehouse, etc.  Organization must know whether their processes are aligned to an Internet technology-based approach.  An organization must understand how its customers view and use technology within the marketspace and must leverage that knowledge to build an effective infrastructure that facilitates an agile and flexible e- commerce strategy.  An organization must assess its internal value chain as well as those of its suppliers and build to minimize costs and maximize efficiencies. EC Strategy - پردیس بین الملل دانشگاه گیلان

36. 36 1.6.2. Market  An organization must understand what the implications of e-commerce and technology are for the marketspace in which the organization is to compete in terms of: Branding Relationship management  An organization must determine whether its target market is the same as its traditional bricks-mortar marketspace or if it has moved.  If its core marketspace have moved, is it still realistically open to traditional organizations moving onto the Net?  An organization must understand how the market is going to segment and grow over the near future due to the impact of the internet and must determine whether the organization will be able to move rapidly enough to meet those changing needs.  Organization must assess the impact of pure Internet-based organizations and use their own traditional core strengths-market knowledge and product knowledge to offset Internet-based companies’ nimbleness. EC Strategy - پردیس بین الملل دانشگاه گیلان

37. 37 1.6.3. Service  An organization must determine the new service level expectations of the customer.  An organization must understand what the customers’ new value proposition requirements are in terms of cost, service level expectations, and information-based service.  Organizations must reassess their service value chain: How are we going to acquire customers? How are we going to develop customer relationships through the new medium? How can we best fulfill the customers’ needs – bricks & mortar, clicks & mortar, or online? How do we support our customers during purchase and through order fulfillment? How do we retain customers between orders? EC Strategy - پردیس بین الملل دانشگاه گیلان

38. 38 1.6.4. Brand Organizations need to determine how to best leverage their existing brand. Do we have the ability to create a strong dot-com brand? What is the basis of that brand? What are the implications for our brand in terms of the technology we employ, develop, or use? What are the challenges for creating a new dot-com brand? Does the Internet demand an adjustment or a completely new service provision? Will new brand positioning change our existing brand? EC Strategy - پردیس بین الملل دانشگاه گیلان

39. 1.7 Bonding factors toward the development of an EC strategy 1. Leadership 2. Infrastructure 3. Organizational Learning EC Strategy - پردیس بین الملل دانشگاه گیلان 39

40. 40 1.7.1. Leadership  Does the CEO have a vision for e-commerce?  Does the CEO have a track record of taking technology change in step?  Do the senior executives share a technology vision? Also, do they understand its impact upon their functional area and the organization as a whole?  Is the leadership stable or in a continual state of flux? EC Strategy - پردیس بین الملل دانشگاه گیلان

41. 41 1.7.2. Infrastructure  Can the organization’s technology infrastructure support the new model of e-business  Can the organization’s technology infrastructure support the move to mass customization?  What are the implications for the organizational changes needed to be competitive in an e-commerce environment?  Does the organization’s infrastructure interface with the infrastructures of their suppliers and customers in the electronic marketplace? EC Strategy - پردیس بین الملل دانشگاه گیلان

42. 42 1.7.3. Organizational Learning  Does the organization support internal learning? Scanning the technology horizon for change and then adopting that change where appropriate Developing a self-awareness inside the boundaries of the organization to drive practice and process change  Can the learning of the organization with respect to markets, product, technology, processes, etc., be quickly refocused into a new technology-based method of production? EC Strategy - پردیس بین الملل دانشگاه گیلان

43. 1.8 Summary EC Strategy - پردیس بین الملل دانشگاه گیلان 43 1. Key Factors for an Organization ’ s Success 3. The Executive should... 2. Types of marketspace

44. EC Strategy - پردیس بین الملل دانشگاه گیلان 44 1.8.1 Key Factors for an Organization ’ s Success Does the organization possess first-mover advantage in the marketspace? Does the organization differentiate itself in the marketspace? Does the organization possess the ability to be flexible and agile in the e-marketspace?

45. 45 These four areas form the basis for the creation of a unified strategy: 1. Technology 2. Brand 3. Market 4. Service Three other success factors need to be in place: 1. Strong corporate leadership at the executive level 2. A flexible infrastructure and (IT) architecture 3. A commitment to organizational learning. EC Strategy - پردیس بین الملل دانشگاه گیلان

46. 46 1.8.2 Types of marketspace Five types of mechanisms the organizations wish to serve as a market mechanism: B2C : the enterprise services the needs of the retail customer B2B : an enterprise services the needs of other businesses B2G : an enterprise services the needs of a government or its agencies G2B : governments interact with businesses or citizens through portals The e-consortium : multiple businesses come together to provide a leveraged service EC Strategy - پردیس بین الملل دانشگاه گیلان

47. 47 1.8.3 The Executive should... The development and execution of a successful e- commerce strategy is a difficult intellectual and creative task, one that every executive will have to undertake. Key Steps: determine the core competencies of your organization determine the limitation in the new markepspace assess the mechanisms available to move forward. EC Strategy - پردیس بین الملل دانشگاه گیلان

48. Break time EC Strategy - پردیس بین الملل دانشگاه گیلان 48

49. EC Strategy - پردیس بین الملل دانشگاه گیلان 49

50. 2.1 Introduction EC Strategy - پردیس بین الملل دانشگاه گیلان 50 EC strategy will vary depending on: The nature of the organization Born on the net Move on the net The nature of the products Service based Manufacturing or mixed The online model the organization wishes to adopt B2B, B2C, and so on

51. No matter the size and type of the enterprises: EC Strategy - پردیس بین الملل دانشگاه گیلان 51 Four positional factors Technology Service Market Brand Three bonding factors Leadership Infrastructure Organizational Learning The framework is valid for any enterprises in each sector with every size

52. 52 2.2 Bonding and leadership factors Leadership Infrastructure Service Market Organizational Learning Organizational Learning Brand Technology Bonding factors EC Strategy - پردیس بین الملل دانشگاه گیلان

53. 53 The Bonds of an e-Commerce Strategy Organizational Learning Infrastructure Leadership Foundations of a strong EC strategy Preparation of the ground before the functional actions Strong interaction between components EC Strategy - پردیس بین الملل دانشگاه گیلان

54. 2.2.1 Leadership Primary drivers of change and the creators of vision are CEO. Every successful EC project has a champion in organization. Senior executives of CIO in place Lessons learned from cases: Keep an open mind with regard to all new technologies Don’t get isolated from experimental technologies that are coming over the technology horizon Encourage quickly built research teams Be ready to make the necessary amount of change in corporate strategy due to technology changes EC Strategy - پردیس بین الملل دانشگاه گیلان 54

55. 2.2.2. Infrastructure Once the need to develop EC had been identified, the single most important issue faced executives is infrastructure Infrastructure considered at three levels Strategic – alignment of future business plan with new technology challenges (Ch. 4) Organizational –align work practices and process flow to execute business goals Physical layer –software, hardware and telecommunications infrastructure that execution occurs EC Strategy - پردیس بین الملل دانشگاه گیلان 55

56. Lessons for executives from the cases: Create a flexible infrastructure that act as ‘shock absorber’ of change Create a technology that is scalable, secure and vigorous Maintain awareness of all standards, attempt to influence development of standards, and plan for their integration ASA Feasible ≠ not possible under pressure Factors affecting infrastructure come from strategic, organizational and physical layers Infrastructure creation need open level of communication across all levels of the organizations Executives cannot divorce themselves from technological understanding EC Strategy - پردیس بین الملل دانشگاه گیلان 56

57. 2.2.3 Organizational Learning (OL) Ability to react and deploy an EC solution depends on ability to effectively leverage OL Shared insights, knowledge and mental models = memory Interconnection exists between factors for examples leadership promote learning by: Placing trust at all levels between colleagues Stimulate an environment of intellectual curiosity Facilitate new concepts and technologies even if traditional metric may not applicable EC Strategy - پردیس بین الملل دانشگاه گیلان 57

58. Key drivers with regard to OL can be acquire: Crate an environment that stimulates and fosters OL Holistic learning – OL has to have a focus, that focus has to driven from strategic objectives, objectives in the areas of brand, technology, service, and market should combined to provide a holistic learning OL creates an environment of positive change and continuous process refinement. Without this organizational inertia occurs! EC Strategy - پردیس بین الملل دانشگاه گیلان 58

59. 59 2.3 Integration of the EC Leadership Propositions In creating an EC strategy, it is clearly to align and integrate the four main areas of positional strategic focus: technology, brand, service, and market. This is a challenging task that must be deeply considered at the beginning of strategy formulation since both the dollar and opportunity costs of dramatic strategic change after execution can be high. This is not to say that change is not occurring; change in this arena is inevitable and continuous, with victory coming to those who can adapt fastest and be nimble in the face of change. EC Strategy - پردیس بین الملل دانشگاه گیلان

60. 60 Integration of the Four EC Leadership Propositions Technology Leadership Brand Leadership Market Leadership Service Leadership Integrated e-commerce strategy EC Strategy - پردیس بین الملل دانشگاه گیلان

61. 1. Technology Leadership – early adoption of an emerging technology (Ch.4) 2. Brand Leadership – how to most effectively utilize Internet benefits to develop organization’s overall brand strategy? (Ch.7) 3. The Service Payoff – service leadership via internet by focus on all information surrounding costumer at all contact points. Service can not immediately translate into purchase.(Ch.6) 4. In Search of Market Growth - understanding the market within which enterprises operate, segment market, combining all factors to focus on market growth(Ch.5) EC Strategy - پردیس بین الملل دانشگاه گیلان 61

62. 62 2.4 What is the Next... Organizations will always be adjusting their strategies to meet the changing environment in which they operate, and the model aims at assisting executives in understanding the importance and weighting that need to be applied to each factor. Based on the seven-dimension EC strategy model, If you want your company to succeed, the solution is to move to an EC model ASAP. Ownership, technology leadership, market, brand, service, and strategy rollout are discussed in subsequent chapters EC Strategy - پردیس بین الملل دانشگاه گیلان