Week 2:

1
Week 2

• Electronic Commerce Business Strategy for
  Competitive Advantage
• V.F. Kleist, Ph.D.

2
Why have an electronic commerce strategy?
Electronic Commerce
"Strategies for Success"
Or, how to win at ecommerce?
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Electronic Commerce Business Strategy for
Competitive Advantage

• Review of Last week, What is Electronic Commerce,
  business models for success (Rappa)
• Notes from text Chapter 2, (Amor)
• Forces that drive use of Electronic Commerce
• Changes that Electronic Commerce might yield for
  a business, and
• Impacts of Electronic Commerce on Firm
• Electronic Commerce Strategy and Implementation
  (Turban, et al, 2000)

4
Business issues of EC (Turban, et al, 2002, Chpt.
1)

• New way of doing business
• Different if selling to customer v. corporations
• Has economic impact on competition
• New role of intermediaries
• Using EC in supply chain management
• Can improve customer service
• Can use EDI via the internet
• Can change methods of marketing

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Electronic Markets (Turban, et al. Chpt. 1)

• New vehicle for business
• Not a building, but a network location where
  business interactions occur
• Where shoppers and sellers meet
• Requires transfer of payments
• Participants are brokers, buyers, sellers
• Participants may never even meet
• Means of interconnection varies between parties,
  can change by event or transaction
• Trace flow of how an electronic market works.

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Wal Mart example of IOS (Turban, et al. Chpt. 1)

• Worlds largest retailer, 100 B in sales
• Coordinates production, marketing, finance via
  computer networks
• Provides each supplier a monthly profit and loss
  statement on their products
• Uses Collaborative Forecasting and Replenishment
  Ecommerce Model (CFAR)

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Preparing the Online Business, Chpt. 2, Amor

• Preparing the Online Business
• Competitor Analysis on the Internet
• The Fourth Channel
• Paradigms in the New Economy
• Return on Investment
• Driving Business Process Reengineering
• Designing, Developing and Deploying the System

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Benefits to Electronic Commerce (Greenstein and
Feinman 2000, p. 3, direct quote)

• Internet and web-based electronic commerce is
  more affordable than traditional EDI
• Internet and web-based electronic commerce allows
  more business partners to be reached than with
  traditional EDI
• Internet and web-based electronic commerce can
  reach a more geographically dispersed customer
  base
• Procurement processing costs can be lowered
• reductions in inventories
• lower cycle times
• better customer service
• lower sales and marketing costs

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Reasons to Move to EC (Amor, 2002)

• Expand market reach
• Visibility
• Responsiveness
• New Services
• Strengthen business relationships
• Cost- Reduction
• Channel Conflicts

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EC Benefits to Organizations (Turban, et al.
chpt. 1)

• Expands markets
• Decreases cost of paper based info
• Reductions in inventories
• Pull supply chain management
• Customization of products
• Reduces time between outlay of capital and
  receipt of products and services
• Supports BPR
• Reduces telecommunications costs
• Improves image, improved customer service,
  newfound business partners

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EC Benefits to Consumers (Turban, et al, Chpt. 1)

• Shop 24 hours a day
• More choices
• More products
• Less expensive products
• Quick delivery
• Electronic communities
• Facilitates competition
• Virtual auctions
• Work at home
• Lower prices
• Access to public services

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Negatives to EC (Turban, et al., 2002, Chpt. 1)

• Lack of security, reliability, standards,
  protocols
• Insufficient bandwidth
• Software development tools still evolving
• Difficult to integrate EC software with back
  office platform
• Vendors need more hardware and software, and
  these products need to be supported
• Cost to develop is high, hard to see payback
• Lack of trust, privacy, security cause resistance
• Legal issues unclear

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Ecommerce Business Strategies
Corporate Mission and Strategy
MIS Strategy
Web Based Ecommerce Mission
Ecommerce Plan
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Ecommerce Business Strategies

• How much business on web in next 12 months, two
  years?
• Fully digital, web based business, or just fourth
  channel for your firm (e.g., face to face,
  telephone or mail)?
• How fast is the company going to grow?
• What are your expectations for return on
  investment? Cost reduction?

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Planning for Ecommerce (Amor, 2002)

• Find a champion
• Plan for change
• Define a pilot project
• Estimate the costs
• Measure productivity
• Re-engineer business processes
• Learn as you go
• Prepare for resistance
• Prepare for disaster
• Create a dark site

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Issues of Web Marketing (Amor, 2002)

• Brands
• Change
• Conciseness
• Dynamic Sites
• Finances
• Free Givaways
• Global Village
• Color schema
• File size

• Live Events
• Niche Markets
• Promotion
• Syndication
• Technology
• Feedback
• FAQ
• Navigation Aids

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Why is the web so compelling in a marketing
sense? (Bruner 1998, Chapter 2)

• Interactive
• Personal
• Infocentric
• Instantaneous
• Measurable
• Flexible
• Interlinked
• Economical
• Resources

18
Enterprise.com Market Leadership in the
Information Age (Papows 1998)

• The Network Centric Era and the Changing
  Workplace
• The Web Forger of the New IT Economics
• The Web/Virtual Office Based Era
• The Market Facing Enterprise
• Knowledge Management The Sustainable
  Competitive Advantage
• Converging and Transforming Industries
• The Great American Economic Surprise
• The Race For Global Leadership

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New Rules for the New Economy(Kelly, 1998)

• Let go at the top
• From places to spaces
• No harmony. All flux
• Relationship tech
• Opportunities before efficiencies

• Embrace the swarm
• Increasing returns
• Plentitude, not scarcity
• Follow the free
• Feed the web first

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Outlook for the Future (based on Amor)

• Consumer devices
• Privacy and Security
• Next Generation Internet
• Brokers
• Total automation of business
• Social impacts
• Electronic commerce vs. .coms

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Discussion

• How can electronic commerce reduce inventory
  costs?
• How can electronic commerce reduce production
  cycle time?
• How can electronic commerce enhance customer
  service?
• How can electronic commerce help a firm reach its
  customers in a very low-cost fashion?
• Does Internet access make employees more or less
  productive?
• Give an example of electronic commerce in the
  suppliers value chain.

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Internet Building Blocks (PriceWaterhouseCoopers,
2001 Technology Forecast)

• Applications Programming Interfaces
• Server side programming languages and
  environments
• Web Server Products
• Improving Web server performance
• Client side technologies
• Schemas, frameworks and vocabularies
• Internet related products and services