1. Slide 4.1 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Strategies for e - Business CONCEPTS and CASES Creating Value through Electronic and Mobile Commerce Chapter 4: Internal analysis: e-business competencies as sources of strengths and weaknesses companies

2. Slide 4.2 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 4.1 Understanding core competencies in e-business Chapter at a glance 4.4 Selecting activities for online interaction with customers - the ICDT framework 4.4.1 Information activities 4.4.2 Communication activities 4.4.3 Transaction activities 4.4.4 Distribution activities 4.2 Analysing the Internet-impacted value chain 4.3 Leveraging the virtual value chain 4.5 Moving beyond the value chain to value networks

3. Slide 4.3 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 After this session you should be able to:  Understand the meaning of core competence in e-business.  Assess the impact of the Internet on the value chain.  Appreciate how a company can leverage the virtual value chain.  Understand the four virtual spaces of the ICDT (Information, Communication, Distribution, and Transaction) framework.  Apply the ICDT framework for selecting activities suited for e- business.  Recognise that companies move from managing an internal value chain to operating along a value network. Learning outcomes

4. Slide 4.4 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Capabilities The ability to deploy resources by co-ordinating them through Structures Processes Systems Strategic importance Valuable Unique Hard to imitate/ substitute Valuable across different products/markets Build resources Utilise resources e-Business competencies Resources Intangible resources Tangible resources (Equipment, location,...) (Technology, know- how, brand,...) Source: Adapted from H. Hungenberg (2006), p. 143. Exhibit 4.1 Distinctive e-business competencies result from the combination of unique resources and capabilities 4.1 Understanding core competencies in e-business

5. Slide 4.5 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Inbound logistics Oper ations Outbo und logisti cs Mark eting and sales After- sales servic es Demand and supply processes Service processes New product development processes Etc. Exhibit 4.2 The core competence approach cuts across different functional areas within a firm 4.1 Understanding core competencies in e-business

6. Slide 4.6 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 The following criteria should be used when including specific activities in a company analysis Display different economics Provide high differentiation potential Present sizeable costs These are activities that can greatly increase tangible and intangible consumer benefits, such as product and service quality, convenience and reputation. These are activities that add significantly to the overall cost structure of the firm. For instance, the development activity of a new software program displays very large economies of scale since the software can be replicated at a negligible cost. Source: See M. Porter (1998). 4.2 Analysing the Internet-impacted value chain

7. Slide 4.7 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Inbound logistics OperationsOutbound logistics Marketing and sales After-sales services Firm infrastructure Human resource management Technology development Procurement Primary activities Support activities Source: Adapted from M. Porter (1998) Exhibit 4.3 A company’s value chain consists of distinct value-adding activities 4.2 Analysing the Internet-impacted value chain

8. Slide 4.8 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Firm Infrastructure Web-based, distributed financial and ERP systems On-line investor relations (e.g. information dissemination, broadcast conference calls) Human resource management Self-service personnel and benefits administration Web-based training Internet-based sharing and dissemination of company information Technology development Collaborative product design across locations and among multiple value-system participants Knowledge directories accessible from all parts of the organisation Real-time access by R&D to online sales and service information Procurement Internet-enabled demand planning Other linkage of purchase, inventory, and forecasting systems with suppliers Direct and indirect procurement via marketplaces, auctions and buyer-seller matching Exhibit 4.4 The Internet impacts all activities in the value chain Source: Reprinted from M. Porter (2001) 4.2 Analysing the Internet-impacted value chain Inbound logistics Real-time integrated scheduling, shipping, warehouse management, demand management & planning, and advanced planning & scheduling across the company and its suppliers Dissemination through out the company of real-time inbound and in-progress inventory data Operations Integrated infor- mation exchange, scheduling and decision making in in-house plants and components suppliers Outbound logistics Real-time transaction of orders Automated customer- specific agreements and contract terms Customer and channel access to product development and delivery status Collaborative integration with customer forecasting systems Integrated channel management Marketing and sales Online sales channels including web sites and marketplaces Real-time inside and outside access to customer information, product catalogues, dynamic pricing, inventory availability, online submission of quotes, and order entry Online product configurators Customer-tailored marketing via customer profiling After-sales service Online support of customer service representatives Customer self- service via websites and intelligent service request processing Real-time field service, access to customer account review, work-order update, etc. Web-distributed supply chain management

9. Slide 4.9 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 New customers New products New services Physical value chain Data Etc. Customer identification Purchasing process Logistics Etc. Customer identification information Purchasing information Logistics information Virtual value chain New markets Data Gather Organise Select Synthesise Distribute Source: Adapted from A. Enders and T. Jelassi (2006), pp. 31–44. Exhibit 4.5 The virtual value chain illustrates how information captured in the physical value chain can be used to develop new markets 4.3 Leveraging the virtual value chain

10. Slide 4.10 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Virtual transaction space Virtual distribution space Virtual information space Virtual communication space Traditional marketplace The market space Source: Adapted from A. Angehrn (1997), pp. 38-47. Exhibit 4.6 The ICDT model describes the four main usage dimensions of the Internet in the virtual market space 4.4 Selecting activities for online interaction with customers - the ICDT framework

11. Slide 4.11 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Inbound logistics Core value chain activities Value chain integrators Manufacturing Admin., e.g. travel Finance Human resources Admin., e.g. travel Suppliers Buy-side intermediaries Fulfilment Sell-side intermediaries Strategic core value chain partners Non-strategic service partners Upstream value chain partners Downstream value chain partners Source: Adapted from D. Chaffey (2007), p.282 Exhibit 4.7 The value network includes numerous partners with differing functions 4.5 Moving beyond the value chain to value networks

12. Slide 4.12 Tawfik Jelassi and Albrecht Enders, Strategies for e-Business, 2 nd edition, © Pearson Education Limited 2008 Summary ■First, this chapter defined the concept of a competence as a combination of different resource and skills. It outlined the attributes that a competence must fulfill in order to quality as a core competence; there are: being valuable, unique, hard to imitate, and valuable across different products or markets. It also highlighted the core competence concept in an e-business context. ■Second, the chapter discussed the value chain, which disaggregates the firm into strategically relevant activities. It recognized two types of activities within a firm: primary activities (which include inbound logistics, operations, outbound logistics, marketing and sales and service) and support activities (which include firm infrastructure, human resources, technology development and procurement). It then discussed the impact of the Internet on the value chain. ■Third, the chapter introduced the concept of the virtual value chain, which suggests that information captured in the physical value chain (e.g., for activities such as order processing or logistics) should be used as a new source of value creation to enhance the quality of customer service. It also provided a critical perspective of the resource- based view versus the market-based view of strategy formulation. ■Fourth, the chapter presented the ICDT (Information, Communication, Distribution and Transaction) framework and illustrated its four spaces through some specific examples. ■Finally, the chapter described how a company can move beyond managing an internal value chain to operating along an IT-enabled value network. It also listed the different types of external partners that are typically members of such a value network.