Dickson K.W. Chiu

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COMP7880 E-Business Strategies Exploring new
market spaces

• Dickson K.W. Chiu
• PhD, SMIEEE, SMACM, Life MHKCS
• Jelassi Enders Chapter 7

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Our Roadmap
Mobile e-commerce strategy
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E-business strategy
Strategic analysis
Strategy implementation
Strategy formulation
3
Externalanalysis
5
9
Strategyoptions
Internal organisation
Opportunities/ threats
6
7
10
13
Sustaining competitive advantage
Implementation
Exploring new market spaces
Interaction with suppliers
Strengths/ weaknesses
4
Internalanalysis
11
8
Creating and capturing value
Interaction with users/customers
3
Value curve provides insights into new market
spaces
High Low
Value curve of traditional bookstores
Performance
Value curve of Amazon.com
Convenience
Selection range
Speed
Face-to-face interaction
Price
Dimensions of benefit
Source Adapted from C. Kim and R. Mauborgne,
(1999).
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The first step leading to value innovations is
the visual awakening

• Assignment for team exercise

Activities

• Pick a specific company offering

• Each team member writes down what he/she
  considers to be the key product/service elements

• As a group discuss and reach consensus on the key
  elements

• Rate the offering's level on each key element
  against the main competitors

• Do you see other competitors with radically
  different value curves?

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Display the current situation of the offering
selected

• Value curve of . . . . . . . . . . .

Very high
High
Offering level
Average
Low
Very low
Non existent
Key elements
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Value innovations focus on customers rather than
competitors
Characteristics of conventional and value
innovation logic
Conventional logic
Value innovation logic
Assumption Strategic focus Customers Resour
ces Offerings
An industry's value curvesfollow one basic
shape. Build a competitive advantageand beat
the competition. Retain and expand customerbase
through segmentation andcustomization. Focus on
thedifferences. Utilize existing assets
andcapabilities. Offer the products and
servicesof your industry.
New value curves can be shapedthat solve
traditional trade-offs. Pursue a quantum leap in
customervalue. Competition is no
benchmark. Target the mass of buyers. Letsome
existing customers willinglygo. Focus on key
commonalities in what customers value. Ask what
we would do if we werestarting anew? Offer the
total customer solutionexceeding industry
boundaries.
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The second step leading to value innovations is
the visual exploration

• Assignment for team exercise

Activities

• Adopt the perspective of a new industry entrant
  and reconsider the existing value curves

• Use one or two of the paths to experiment with
  the creations of a new value curve
• Industry Ask which elements of substitute
  industries are un/important to target buyers?
• Strategic groups Ask which key elements of the
  offer compel buyers to buy up or buy down?
• Buyers Ask who are the decision makers and how
  would changing buyer focus affect the key
  elements?
• Scope Ask how is the offer currently used and
  what activities/services might be valuably
  incorporated?
• Appeal Ask how we can change the polarity of
  appeal?
• Time Ask what trends are impacting our industry
  and how do the key elements match

• Plot a new value curve. Indicate which key
  elements are eliminated, reduced, raised or
  created

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Display possible changes to the existing value
curves

• Value curve of . . . . . . . . . . .

Very high
High
Offering level
Average
Low
Very low
Non existent
Key elements
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Six paths framework creating value innovations
in e-business
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6
Looking across substitutive industries
Looking across time/trends
Factors to bereduced?
2
5
Looking across functional or emotional appeal
Looking across strategic groups
Factorsto be eliminated?
Factors to be created?
Factors to beraised?
4
3
Looking across the chain of buyers
Looking across comple-mentary offerings
Source Based on C. Kim and R. Mauborgne (1999),
pp. 8393.
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Pinpointing possibilities for new value creation
Where can we reduce our range of offerings? What
costs us a lot of money but does not create
benefit?
Does what we do really create consumer benefit?
If not, which components or features of our
product or service should we eliminate?
2
1
Reduce
Eliminate
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3
Create
Raise
Where should we raise the standard of products or
services? Where can we increase benefit by
expanding our existing offering?
What can we do that has not been done so far?
Source See also W. C. Kim and R. Mauborgne
(1997), pp. 103112, and (1999), pp. 8393.
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Value innovation shifts from head-to-head
competition to creating new market
Six path framework to create value innovations
Head-to-head competition
Creating new market space
Looks across substitute industries Looks across
strategic groupswithin its industry Redefines
the buyer group Looks across complementaryoffer
ings beyond the boundsof its industry Rethinks
the functional/emo-tional orientation Adopts
the results of futuretrends today
Industry Strategicgroup Buyer group Product
scope Appeal Time/trends
Focuses on rivals in its industry Focuses on
competitive posi-tion within strategic
group Focuses on better serving theown buyer
group Focuses on maximising valueof the
industry's products/services Focuses on
improving thegiven appeal Focuses on adapting
to trendsas they occur
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Finding the right timing for market entry in
e-business is critical
Early-mover disadvantages
Early-mover advantages
Learning effects Brand and reputation Switching
costs Network effects
Market uncertainty Technological
uncertainty Free-rider effects
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Entrepreneurship process

• Entrepreneurship and creativity is a process!
• Identify an Opportunity
• Develop a Concept
• Determine the Required Resources
• Acquire the Necessary Resources
• Implement and Manage
• Harvest the Venture

The Environment
Entrepreneurial Process
The OrganizationalContext
The Entrepreneur
The Resources
The Concept
Source Morris et al. Entrepreneurship
Innovation
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Entrepreneurship How to find opportunities
Types Methods Sources Detractors
Perennial Deliberate search vs. Discovery The rules change Demographics change No need present Window is not yet open
Occasional Market pull vs. Resource or capacity push Underserved markets Social trends Strong loyalties High switching costs
Multiple Causes New customers to the market Satisfied customers
Multiple Effects Increase in usage rates Shortages Easy for others to enter with alternatives Intense competition
New knowledge Customers hard to reach
Source Morris et al. Entrepreneurship
Innovation
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Entrepreneurship Types of Innovations

• New to the world products or services
• New to the market products or services
• New product or service line that at least one
  competitor is offering
• Addition to existing products or service lines
• Product/service improvement, revision, including
  addition of new features or options
• New application of existing products or services,
  including application to a new market segment
• Repositioning of an existing product or service

Source Morris et al. Entrepreneurship
Innovation
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Entrepreneurship - Entry Wedges
Source Morris et al. Entrepreneurship
Innovation