Chapter 13EC Strategy, Globalization, and

SMES

Learning Objectives1. 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.

Learning Objectives6. 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.

Organizational Strategy: Concepts

and Overview• *Strategy• Strategy in the Web Environment• Porter’s Five Forces Model and

Strategies as Influenced by the Internet and EC1. Threat of entry of new competitors2. Bargaining power of suppliers3. Bargaining power of customers or buyers4. Threat of substitute products or services5. Rivalry among existing firms in the industryo Strategies for Gaining Competitive

Advantage

Porter’s Five Forces Model

Organizational Strategy: Concepts

and Overview• The Impact of the Internet• Strategic Planning for IT and EC

The Strategy and Performance Cycle and

Tools• Strategy and Performance Cycle and

Tools• *Strategy Initiation—Goals

o Improved performanceo Gain of competitive advantageo Increased sales and revenueo Improved customer and partner service and

relationshipso Generation of new business models and

facilitating innovation

The Strategy-Performance Cycle

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 Implementationo The major specific activities and outcomes from this

phase include:• Project planning• Resource allocation• Project management

The Strategy and Performance Cycle and

Tools• *Strategy Assessment• Performance Improvement and

Innovations• Major Tools for Strategic Planning

E-Commerce Strategy Initiation

• Representative Issues in E-Strategy Initiation in

E-commerceo First-Mover Advantageo Managing Channel Conflict and

Disintermediation• *Disintermediation

o Price Conflict and Its Managemento Separating Online and Offline Operations

• Brand Independence

• Strategy in the Web 2.0 Environment and in Social Networking

E-Commerce Strategy

Formulation• Selecting E-Commerce Opportunities• Determining an Appropriate EC

Application Portfolio Mixo The BCG Model and an Internet Portfolio

Mapo The Viability-Fit Model

• Risk Analysis in Strategy Formulationo *E-Commerce risk

• Collaborative Efforts in Strategy Formulation

The Internet Portfolio Map

Sources: Based on Tjan (2001), Sones (2001); and the authors’ experiences

E-Commerce Strategy

Formulation• Security Issues to Consider During

Strategy Formulation• Other Issues in E-Commerce Strategy

Formulationo Managing Conflict Between the Offline

and Online Businesseso Pricing Strategy

• *Cost-plus

o Multichannel Strategyo Acquisitions, Partnerships, Joint Venture,

and Multi EC Model Strategy

E-Commerce Strategy

Implementation• E-Commerce Strategy Implementation

Processo Find a Champion

• *Project champion

o Start with a Pilot Projecto Allocate Resourceso Manage the Project

• E-Commerce Strategy Implementation Issueso Build, Buy, or Rent EC Elementso Outsource: What? When? To Whom?

• *Outsourcing• Software-as-a-Service

E-Commerce Strategy

Implementation• Redesigning Business Processes: BPR

and BPMo *Business process reengineering (BPR)o *Business process management (BPM)o Change Management

E-Commerce Performance Assessment

• The Objectives of Assessmento 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.

E-Commerce Performance Assessment

• The Performance Assessment Process1. 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.

The Performance Assessment Process

E-Commerce Performance Assessment

• Establish Metricso *Metrico Measurements in Performance Metrics

• *Key performance indicator (KPI)• Intangible variables

o E-Commerce Metrics in Actiono Performance Metrics

• Monitoring Performanceo Monitoring the Social Media Field

• Social Media Monitoring Tools

o *The Balanced Scorecard (BSC)

E-Commerce Performance Assessment

• Analyzing Performance Data• Defining EC Analytics

o Major Types of Analysis

• Web Analytics and Its Major Toolso *Web analyticso Social Media Activitieso *Sentiment Analysis (opinion mining)

Performance Improvement and

Innovation• An Overview of Performance

Improvement• Dashboards in E-Commerce

o What Is a Dashboard?• *Information dashboard

• Innovation for Performance Improvement

Performance Improvement and

Innovation• Innovative Strategies: Some Illustrative

Exampleso Target Corporation o Best Buy o Travelzoo Inc. o Facebook o Apple o Cars.com o Google+o IBM

A Strategy for Global E-Commerce• Benefits and Extent of Global Operations

o Globalization and Social Networking

• Barriers to Global E-Commerceo Cultural Differenceso Language Translation

• Machine Translationo Legal Issueso Geographic Issues and Localization

• Web Localization• Payments in Global EC Trades

o Economic and Financial Issues• E-Commerce in Developing Countries

A Strategy for Global E-Commerce• Breaking Down the Barriers to Global E-

Commerceo Be strategico Know your audienceo Localizeo Think globally, act consistentlyo Value the human toucho Clarify, document, explaino Offer services that reduce trade barriers

E-Commerce Strategy for Small and Medium-sized

Enterpriseso 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

Screen Shot Of Blissfultones.Com

Managerial Issues1. 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?

Summary1. 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.