E-business - Utrecht University · • Information systems strategy and e-business strategy . ......

E-business Lectures 5&6: E-business strategy

Outline

Lecture 5 •  Intro •  Strategic Analysis •  Strategic Objectives

Lecture 6 •  Strategy Definition •  Strategy Implementation •  Information systems strategy and e-business

strategy

E-business strategy

1.  Strategic analysis 2.  Strategic objectives 3.  Strategy definition 4.  Strategy implementation

Recap: Strategic analysis

•  SLEPT (Macro-‐environment) • Resource analysis • Por;olio analysis •  SWOT • Demand/CompeCtor (Porter’s 5 forces model)

Techniques

•  Stage models •  Specific e-‐business opportuniCes and threats

E-‐business specific techniques

Recap: Strategic objectives

•  Complement or Replace

Vision

•  SMART •  Online revenue contribution •  Customer value target

Objectives

•  Vision about capability to change or to reinvent •  Online revenue contribution

E-business specific techniques

E-business strategy

1.  Strategic evaluation/analysis 2.  Strategic objectives 3.  Strategy definition 4.  Strategy implementation

Strategy definition

• OpCon generaCon • OpCon evaluaCon • OpCon selecCon

OpCons

• 1. Channel prioriCes • 2. Market and product development • 3. PosiConing and differenCaCon strategies • 4. Business and revenue models • 5. Marketplace restructuring • 6. Supply-‐chain management capabiliCes • 7. Internal knowledge management capabiliCes • 8. OrganizaConal resourcing and capabiliCes

E-‐business strategic decision

Strategy definition

•  Strategy definition is •  formulation, •  review and •  selection of strategies to •  achieve strategic objectives

•  Preceded by •  Generating options •  Evaluation of options •  Selection of options

Matrix Model for options (Tjan, 2001)

Viability 0 Points 100 points

Market value potenCal < 10 M€ > 1000 M€

Time to posiCve cash flow > 5 years < 1 year

Personnel requirement > 20 people < 5 people

Funding requirement > 35 M€ < 3 M€

Fit Low Medium High

Alignment with core capabiliCes

Alignment with other company iniCaCves

Fit with organizaConal’s structure

Fit with organizaConal’s culture/values

Ease of technical implementaCon

Strategy alternatives matrix

Strategy definition decisions

1.  Channel priorities 2.  Market and product development 3.  Positioning and differentiation strategies 4.  Business and revenue models 5.  Marketplace restructuring 6.  Supply-chain management capabilities (*) 7.  Internal knowledge management capabilities 8.  Organizational resourcing and capabilities

Decision 1: Channel priorities

“Getting the right mix of bricks and clicks” Gulati and Garino (2000)

Channel priorities

•  Internet pureplay: Company trading online with limited or no physical presence, e.g. as retail units •  Particularly start-ups •  Impractical for many businesses

•  Right channeling: •  The right person

•  At the right time •  Using the right communication channel

•  With a relevant offer, product or message.

Channel priorities

•  Right-channeling applications: Example Application and tactics Account-managed relationships Face-to-face and phone with large,

high-sales-volume clients Sell to and serve SME online Internet sales and extranet service Encourage customer to online channels

???

Provide offline conversion during sales

Phone callback or live chat from within web sales

Migrate customers to web self-service

Self-manage accounts for lower-cost-to-serve

Selective service levels for different customer types

Integrated CRM systems


1.  Channel priorities 2.  Market and product development 3.  Positioning and differentiation strategies 4.  Business and revenue models 5.  Marketplace restructuring 6.  Supply-chain management capabilities 7.  Internal knowledge management capabilities 8.  Organizational resourcing and capabilities

Development strategies

•  Question: •  What is sold? •  Who is it sold to?

•  Market and Product development matrix:

Positioning and differentiation

Porter (1985, 2001): Profitability is determined by: 1.  Industry structure 2.  Sustainable competitive advantage Cost and price advantage achieved through: 1.  Operational effectiveness 2.  Strategic positioning


Operational effectiveness (OE) = •  Performing similar activities better than rivals

perform them. •  Internet is (most) powerful tool for enhancing OE Productivity frontier = •  Maximum value a company can deliver at a given

cost, given best available technology, skills, management techniques…

Competition leads to: •  Absolute improvement in OE (for all) •  Relative improvement in OE to no one


“Competitive strategy is about being different”

Strategic positioning = Attempts to achieve sustainable competitive advantage by preserving distinction:

•  Perform different activities from competitors, or •  Perform similar activities in different ways.

Positioning and differentiation (2)

Porter’s Generic strategies (based on 3 dimensions)

•  Level of differentiation •  Relative product cost •  Scope of target market

•  Three most viable bases for positioning: •  Cost leadership •  Differentiation •  Focus

Origins of strategic positioning

Porter (1996): 1.  Variety-based positioning:

based on choice of product or service 2.  Needs-based positioning:

based on choice of customer/market segment 3.  Access-based positioning:

based on segmenting customers who are accessible in different ways

Scope: •  Any positioning can be broad or narrow

Examples

•  Low-cost airline carrier (Ryanair, Easyjet) •  Variety-based, narrow focus

•  Regular airline •  Variety-based, broad focus

•  IKEA •  Needs-based, broad focus

•  Apple •  Variety-based, broad focus

•  Bang & Olufsen •  Variety-based, narrow focus

Trade-off and Fit

Trade-off: •  When you choose a particular position, you choose

not to use other approaches •  These trade-offs are essential and make imitation

difficult Fit: •  Production, marketing, personnel, etc. should all be

consistent: •  When all activities work together as a system,

imitation is difficult.

Alternatives: value disciplines

Treacy & Wiersema: 1.  Operational excellence:

Best total cost 2.  Product leadership:

Best product 3.  Customer intimacy:

Best total service In practice: 1.  Each dimension should be good 2.  Choose excellence in one dimension

Customer value

• Position relative to competitors: •  Product quality •  Service quality •  Price •  Fulfillment time

•  Deise et al. (2000)

Customer value (brand perception) = Product quality ×Service qualityPrice ×Fulfilment time

Business and revenue models

•  Recall: Business model: A summary of how a company will generate revenue, identifying its product offering, value-added services, revenue sources and target customer

•  Revenue model: Describe methods of generating income

Marketplace restructuring

•  Review options for: •  Disintermediation •  Re-intermediation •  Countermediation

Supply-chain management capabilities

•  Questions: •  Integrate more closely with suppliers? •  Which materials and interactions should we

support through e-procurement? •  Can we participate in online marketplaces to

reduce costs? (More in Chapters 6 and 7)

Knowledge

Every day knowledge essential to your business walks out of your door, and much of it never comes back.

Saunders (2000)

Knowledge: •  Combination of data and information, •  With added expert opinion, skills and experience

•  Explicit / Tacit •  Individual and/or collective

Knowledge management

Knowledge management: •  Techniques and tools for disseminating knowledge

• Main activities: •  Identify •  Create •  Store •  Share •  Use

Technologies for KM

Classes of KM applications (Binney, 2000): 1.  Transactional:

Helpdesk, customer service apps 2.  Analytical:

Data mining/warehousing for CRM apps 3.  Asset management:

Document and content management 4.  Process support:

Total quality management, benchmarking, BPR 5.  Developmental:

Enhancing skills / competencies, training, e-learning 6.  Innovation and creation:

Communities, collaboration, virtual teamwork

Web 2.0 for KM

Approaches: •  Content management systems •  Internal blogs •  Micro-blogging: www.yammer.com •  Social networks: www.cyn.in, www.ning.com •  Wiki

Organizational resourcing and capabilities

•  Decide how organization needs to change to achieve the priorities set for e-business.

•  Gulati & Garino (2000): •  In-house division (integration) •  Joint venture (mixed) •  Strategic partnership (mixed) •  Spin-off (separation)

•  QUESTION: what are the advantages of •  Integration •  Spin-off?

E-business strategy

1.  Strategic evaluation/analysis 2.  Strategic objectives 3.  Strategy definition 4.  Strategy implementation

Strategy implementation

•  Planning •  ExecuCon •  Control

ImplementaCon

•  Supply chain management strategies (Chapters 6 and 7) •  E-‐markeCng strategies (Chapters 8 and 9) •  Planning, scheduling and change management (Chapter 10) •  E-‐business analysis and design (Chapter 11) •  ImplementaCon, maintenance and control (Chapter 12)

ImplementaCon issues

Outline

•  Intro •  Strategic Analysis •  Strategic Objectives •  Strategy Definition •  Strategy Implementation •  Information systems strategy and e-business

strategy

IS strategy vs. e-business strategy

•  Question: how does IS strategy supports change? • Business-alignment IS strategy:

•  Top-down •  How can IS be used to directly support a defined e-

business strategy? •  Strategic IS matrix

• Business-impacting IS strategy: •  Bottom-up •  New opportunities from deployment IS may impact

positively on business strategy? •  Redesign business processes? •  Value chain analysis

Strategic Information Systems matrix

Strategic Information Systems

Three types of Information Systems: 1.  Financial information systems:

•  Mechanization and control of financial systems •  Accounting, budgeting, HR,…

2.  Operational / Service information systems: •  Control details and cost effectiveness of business •  Ordering, inventory control, planning,…

3.  Strategic information systems: •  Profound impact on profitability and competitive

advantage •  Links/aligns business and computer strategies

Summary

•  Key characteristics of an e-business strategy model: •  Based on assessment of internal and external

environment •  Have clearly defined SMART objectives backed

up by vision •  Have strategies, tactics and implementation that

select the best techniques to achieve these strategies

•  Have monitoring and control that assess whether the objectives are being achieved and a feedback loop to ensure corrective action occurs.

E-business - Utrecht University · • Information systems strategy and e-business strategy . ......

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