1. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 1 Chapter 10: E-Business Management

2. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 2 LEARNING OBJECTIVES (1) : List the pillars of success for innovative businesses. Explain how management systems can create value for a business. Discuss the interplay between the management components of the e-business value chain. Describe the role that leadership and organizational culture play in giving an e-business a distinctive advantage.

3. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 3 LEARNING OBJECTIVES (2) : Outline the role that organizational learning plays in giving an e-business a distinctive advantage. Discuss how e-businesses are organizing themselves to compete. Recommend the steps that a business would need to take to restructure to be competitive in an e-business environment. Identify which new management positions and duties are used to meet e-business needs.

4. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 4 Vignette: AT&T Thinking Strategically –Why do you think AT&T was a late mover into the Internet industry. –List the types of skills AT&Ts management and employees will need to demonstrate to be competitive in the online marketplace. –Determine if AT&T is too large to respond quickly to market changes. –Explain the importance of a transformational leader in an organization like AT&T.

5. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 5 New vs. Older Business Systems Newly formed e-business systems may have value chains that fit the demands of current competitive environments. Older business systems face a hurdle because they must break old value chains and develop new e- business value chains to maintain competitiveness. –Momentum: the tendency for businesses to keep moving in the same direction. Like ships, the larger the business the longer it often takes to change direction.

6. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 6 Table 10.1: Pillars of Success for Innovative Businesses

7. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 7 Table 10.1: Pillars of Success for Innovative Businesses

8. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 8 Figure 10.1 Management Components of the E-Business Value Chain (1) MANAGEMENT Organization Structure Outsourcing Staff Organization Structure Outsourcing Staff Organizational Learning Employees and culture Intellectual Capital Organizational Learning Employees and culture Intellectual Capital Innovativeness Adaptability Idea generation Innovativeness Adaptability Idea generation Leadership Management Cultures Leadership Management Cultures Intranets, Extranets, Internet

9. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 9 Innovativeness Adaptability: Break old business models. Idea generation: Use teams, encourage creativity. Innovativeness Adaptability: Break old business models. Idea generation: Use teams, encourage creativity. Figure 10.1 Management Components of the E-Business Value Chain (2) Leadership Management: CEOs with vision and technology knowledge. Cultures: Employees who are loyal, flexible, adaptive, and quick to respond. Leadership Management: CEOs with vision and technology knowledge. Cultures: Employees who are loyal, flexible, adaptive, and quick to respond.

10. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 10 Figure 10.1 Management Components of the E-Business Value Chain (3) Organization Structure: Flatter, less bureaucracy. Outsourcing: Focus on core values. Staff: CIOs,CKOs, and Webmasters. Organization Structure: Flatter, less bureaucracy. Outsourcing: Focus on core values. Staff: CIOs,CKOs, and Webmasters. Organizational Learning Employees and culture: Must be willing to collect and use knowledge. Intellectual Capital: Requires careful hiring and training. Organizational Learning Employees and culture: Must be willing to collect and use knowledge. Intellectual Capital: Requires careful hiring and training.

11. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 11 Leadership Top management leaders of organizations: –Set the vision for the company –Oversee the development of strategy –Delegating responsibility to be sure that plans and strategies are carried out. Some executives –See e-business as unproven technologies. –Fear disconnection from management practice because of changes in technology. –Fear loss of power due to new business practices.

12. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 12 Forward-Looking CEOs A survey of 303 IT managers indicated that forward- looking CEOs are learning to love the net: –61.7 percent saw their CEOs as advocates of Internet based technologies, –36 percent were neutral, and only –2.3 percent were technology blockers. CEOs see the use of information technology, the management of data, the impact of new technology, and reengineering as the most important business issues they are facing.

13. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 13 Forward-Looking CEOs The most important business issues forward-looking CEOs are facing: –The use of information technology –The management of data –The impact of new technology –Reengineering

14. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 14 Table 10.2: Techniques To Motivate Management Teams CompanyProblemApproach Charles Schwab Convincing top management team to accept that Schwab was to become a ful-fledged Net Brokerage. C-CEO David Pottruck had 100 senior managers walk across the Golden Gate wearing a jacket emblazoned with “Crossing the Chasm”. Sega Enterprises Top management resisted movement to remake the company for e- business. Chairman Isao Okawa defied Japanese consensus management and threatened those who resisted change with the same of being fired. Resistance disappeared overnight. GE Aircraft Engines Need to change the bureaucratic division in an e-business. CEO James McNerney converted an onld warehouse into and idea laboratory with Foosball tables and open work pods. Change agents were appointed. Oracle Sales execs were afraid that customers would not trust a Web only strategy. CEO Larry Ellison promised to keep older products after producing the Web-only products. He lied. Source: Marcia Stepanek, “How to Jump-Start Your E-Strategy,” Business Week E.Biz, June 5, 2000, pp. 96-100.

15. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 15 Organizational Culture An organization's culture includes the shared values, beliefs, behaviors, and norms that are generally accepted and practiced by group members. –The founder of the organization often sets the tone for an organization's culture. –An organizational cultures must adapt to the competitive situation in which it finds itself. –Cultures can become self selective and reinforcing.

16. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 16 Organizational Culture A "miss-fit" between the organization and its culture can occur when the competitive environment changes. –Organizations that have developed cultures that fit a competitive environment may look to hire only individuals who "fit" the current culture. –Individuals who rise up through organizational ranks may be very good at operating within that culture and they, in turn, reinforce that culture.

17. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 17 Figure 10.2: Environment/ Culture Fit Management team New Hires Current Culture Environmental Fit Competitive Environment Rewards and advancement

18. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 18 Cultural Typologies Organic cultures: –Decentralized control and non-formal relationships. –Organizational structures are often flatter and more responsibility is given to individuals at the bottom of the organizational hierarchy. Bureaucratic cultures: –Use strong hierarchies –Set rules and regulations –Have strong management oversight

19. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 19 Innovative organizations Innovative organizations often: –Have organic forms of culture. –Encourage change agents –Have a culture of innovation where new ideas can be developed, brought forward, nurtured, implemented without fear of failure.

20. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 20 Tools of Innovative E-Businesses Leaders Organizational Learning: Develop systems that can learn from the environment and experience. Hire Talent: Attempt to hire employees who will fit flexible work situations. Cross Functional Teams: Allows for input from multiple constituencies with an organization. Sense of Community: Individuals must feel loyal to an organization and the organizational goal. Develop Intranets: Intranets that can link all internal constituencies within a business

21. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 21 Organizational Learning Organizational learning implies that a business is able to develop insights, knowledge, and associations between actions taken and the effectiveness of those actions. This should allow the organization to adapt by making incremental adjustments to the environment. –Learning occurs at the individual level, but a business can help to spread knowledge throughout the organization

22. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 22 Figure 10.3: Estimated E-Learning Market Spending in Billions of Dollars Source: Michael Pastore, “Global Online Ad Spending: $33 Billion by 2004,” CyberAtlas, August 12, 1999,.lhttp://cyberatlas.internet.com/markets/advertising/article/0,,5941_181901,00.htm>.l

23. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 23 Creating Learning Organizations (1) Creating a learning organizations requires: –Creating a knowledge culture: Encourage employees to capture and share information –Setting value on knowledge created: Show returns for individual effort. –Democratizing knowledge: Allow individuals to collect and use captured knowledge. –Usage of knowledge tools: Email, Intranets, databases, guides, etc.

24. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 24 Creating Learning Organizations (2) Creating learning organizations requires: –Understanding what the organization knows and does not know: Undertake knowledge audits to assess how knowledge can better be captured and utilized. –Acting on the knowledge: Access to organizational knowledge should be easy and encouraged. Intranets can facilitate this process. –Training of Workers: Workers need to be able to access and use the knowledge created.

25. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 25 Talent E-businesses have recognized that human capital is a key area of competitive advantage. In a knowledge economy employees must have the capacity to learn and relearn new tasks. –Human capital is the skill that individuals gain through education, training, and experience. –A knowledge economy gains wealth based on what individuals can create from knowledge, rather than what they can create from physical labor alone.

26. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 26 The Net Generation Net generation (N-Gen - born after 1977) –This is the largest generation that has ever exited. Understand and have grown up with digital technology. –The Internet has already played a role in the development of their lives. –The youngest segment of this generation will not have known a world without the Internet. Prefer collaboration to working alone and do not like the idea of having a traditional "boss". –The have ability to shift easily between jobs. –When they invest their intellectual capital into organizations they expect to be compensated for it

27. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 27 Organization Community vs. Hierarchy –Communities of workers represent social networks as opposed to organizational hierarchies. Social networks map how people in organizations actually communicate. This structure includes individuals, hubs, and gatekeepers

28. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 28 Figure 10.4: Hierarchies and Social Networks Marketin g Info. Services Productio n CE O Purchasin g A Hu b Individual: Communication flow: Social NetworkHierarchy

29. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 29 Teams Marketers must work together with technology specialists, designers, and other individuals with specialized skills in order to create Web sites, e- commerce applications, database management, and utilize other technology based tools –The traditional role of the marketing core (those directly involved in the marketing process) is to stay close to the customers and act as the interface between the company and the customer.

30. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 30 Collaboration software allows team members to work together across distances. –The rapid development of e-business teams in distant locations allows team members to work together on projects, solve customers’ problems, and then move on to other projects. –The biggest problem in using collaboration software is creating a culture where individuals work well in teams and work well online. –Collaboration software, or groupware, permits individuals to communicate via e-mail and message lists, share files, and open file archives. The goal is to have individuals collaborating on projects. Collaboration

31. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 31 Virtual Corporations Allows a business to focus on its core competency by developing a temporary network of value chain components brought together to take advantage of market opportunities. –Partnerships may last only as long as the market opportunity or may continue long time. –Can bring together of the "best" components in developing a value chain. –Aids in creating new ideas for products, positioning in the marketplace, and develops a team of partners who can successfully get the product to the market

32. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 32 Distance Workers Telecommuting allows distance workers to interface with their job and work groups online. Advantages: –In 1998 an estimated 52.1 million workers did all or part of their job by telecommuting from home. –The average age of telecommuters is about 41 years and 48 percent are knowledge workers. –More than 60 percent of employees see telecommuting as having a positive effect on their careers. –Telecommuters save companies money by lowering office space requirements.

33. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 33 Distance Workers Disadvantages of telecommuting. –Concerns about being out of the political office loop. –Have less ability to form relationships with other employees. –Are less likely to be seen by those who can aid in advancement and promotion.

34. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 34 Implementing Telecommuting (1) Carefully select who will telecommute –Not all jobs or employees are likely to fit. –Employees who don't work well at a business are not likely to work well at home. Provide training –May take distance workers up to 18 months to adjust to working at home. –Managers also need to feel comfortable with supervising employees that they can't see.

35. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 35 Implementing Telecommuting (2) Support telecommuters with technology –Technology staff must support equipment that is as good as, or better than, what can be found in the office. Allow for face-to-face contact –Employees and supervisors must be allowed to develop relationships to minimize feeling alienated from the organizational culture. Ensure management support –Ensure top management support - resistance often comes from mid-level managers.

36. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 36 Case 10.1: Buying Into BuyPower Thinking Strategically –Determine who would be hurt in the new business model proposed by GM. –List the key people that would need to buy into the new selling process. –What are the incentives and disincentives that salespeople have in adopting this model? –Speculate on GM’s top management support for this new business model. What key areas could be leveraged to speed adoption of this new business model?

37. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 37 Business Processes Reengineering (1) Five steps to BPR: 1)Top management commitment: –Top management must support the change process and a clear leader of the change team must be designated. 2)Understand current business model: –Modeling how the current business operates. 3)Identify key players in the organization: –Individuals with organization knowledge must be allowed to become part of the change process.

38. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 38 Business Processes Reengineering (2) Five steps to BPR: 4)Develop communication plan: –Communication allows for individuals to become part of the change process. 5)Develop an implementation plan: Analyze leverage points Identify process breakthroughs Design business processes Implement the business process Institutionalize continuous improvement

39. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 39 Spin-Offs Pure-play Internet companies –Are able to develop new e-business models, hire technologically savvy employees, mover quickly to serve new markets, and set strategic goals that fit their competitive environment. Traditional businesses have attempted to achieve these objectives by spinning-off divisions. –A spin-off occurs when a parent company creates an independent division.

40. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 40 Case 10.3 : An Old Player in a New Gamble Thinking Strategically: –Speculate on the reasons that P&G would want to start a Web based venture. –Determine why P&G would spin-off this venture rather than have it “in-house”? –Why would the venture would be located in San Francisco. –Contrast the advantages and disadvantages of having a corporate board tied to P&G. –Evaluate www.reflect.com against other customizable cosmetic Web sites.www.reflect.com –Speculate on the future of reflect.com and P&G’s ability to compete online with this current strategy.

41. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 41 Exercise 10.1: Identifying Components of the Management Value Chain Using the following figure, outline the management value chain for a business with which you are familiar. Indicate areas that can be improved by applying any e-business techniques outlined in this text. Management Organization Structure: Outsourcing: Staff: Organizational Learning Employees and culture: Intellectual Capital:. Innovativeness Adaptability: Idea generation: Leadership Management: Cultures: Intranets, Extranets, Internet

42. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 42 Exercise 10.2: Message Count (1) Keep a log of the number of messages that you receive in one day. Place the message count into categories –Phone calls, email, voicemail, postal mail, interoffice mail, faxes, post-it-notes, message slips, and any others message sources. Rate the messages in terms of: –Immediate action needed, information to remember for future actions, organizational knowledge, and social information.

43. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 43 Exercise 10.2: Message Count (2) Compare and contrast your list against others. Determine if it is possible to remember all of the messages received. Recommend a Web based strategy that would help you receive, organize, and use the information that you must work with every day.

44. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 44 Exercise 10.3: Mapping Social Networks Develop a maps of social networks that you are involved with (This could include networks at business, school, or friends). Draw out any communication links between individuals that would link these networks together. Determine the role that you play in each of the hubs.

45. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 45 Exercise 10.4: Design A Corporate Portal Design a corporate portal for a business. Set up links to the types of information that is needed by each constituency inside the business. Determine how the Web site would foster social networks. Determine the types of information that should be used to increase organizational knowledge. Justify the design of the Web site given the business’s culture.

46. For use with Strategic Electronic Marketing: Managing E-Business 2 e Copyright 2003 South-Western College Publishing Chapter 10 Slide: 46 Competitive Exercise 10.5: Business Process Reengineering Choose a business that you believe needs to restructure itself to compete in an e-business environment. –How does the business model need to change? –How can top management commitment be obtained? –Who are key players in the organization that need to back the change? –What are some key leverage points that can be addressed? –What process breakthrough can be achieved with success?